Profit Sharing, Open Books, & Selling to Private Equity

The simple story is in 2010, there were 2 technology companies on that list. If you look at it today, all but 1 is a technology company.

The people that do adopt it, the people who already have the money in home services, that already have a big business, they will just continue to take more market share. They will become more profitable. And then the small guy that's like, I'm not— they're the ones that are going to suffer.

In Service Autopilot world, we took $10 million less to go with the group we went with because we thought the other would be not as good for the team and for our clients. The really interesting level starts at $3 million a year in EBITDA, not, not gross revenue, profit. When you start getting past that number, now you're starting to really get into better and better multiples. If you're not using technology to be one of the fastest people to respond, to answer the phone after hours, on weekends, turn estimates fast, to follow up on it, all the basics, you're just gonna lose more and more work. You're gonna be relegated to just referral-based work. And that's a really slow way to grow the business. There's a lot to be negative about. And if you only think about the negative, you will never build anything interesting. But if you believe this narrative, then you have a chance of being optimistic and all the optimists have won in life, in my opinion.

All right. Welcome back everyone. We're gonna jump right into today's opening. Last week, Jonathan asked me some lightning round questions. I'm going to be returning the favor. Uh, the twist is, Jonathan, you get one clarifying question, and I'm gonna be asking you which of two options is better. So let's start off. Okay, best, best industry: roofing or commercial cleaning?

Roofing.

All right, best car: Corvette or Mercedes?

Mercedes for me, but Corvette would have to be the answer for the money.

So, okay, so Mercedes, what model then would you be getting?

Do you prefer, um, AMG GT, something in that, like R, or something in that class?

Okay.

All right.

Best retirement, either a traditional 401k or a Roth IRA?

A Roth IRA.

And is that just because it can grow tax-free?

Yeah.

Okay, got it.

I can take it out tax-free. Yep.

All right. Best investment, commercial real estate or index funds.

Can I put debt on the real estate? Do I put that on there? 5x, 5x commercial real estate. Okay, it's a tough one though. That's a tough one. Can I put debt on the index?

Get a bunch of margin debt? Let's go.

If I do margin debt, I might go that way.

Okay, uh, company vehicles— are you gonna lease or buy them?

Buy.

Okay, I'm gonna— you're gonna use cash or debt on that?

I've always done cash.

Okay.

I have no— that's okay. But I just have done cash.

All right. Best mobile app, Notion or Apple Notes?

For me, Apple Notes is crazy fast. Speed is everything.

I knew this one cuz I heard, heard you talk about this in a, in a previous podcast.

Obviously Notion's way better, but all right.

Best way if you are buying out your competitor, use SBA financing or seller financing? Remember, you can ask a clarifying question.

You know, I don't know what clarifying question should be on that one. So my default is I want to do owner financing if I can, but it's contingent on the interest rate that I can negotiate with them for the seller financing.

Okay, assume they're both the same, so 6% across the board.

I still want seller financing, but if I'm— if we differ on this, I want to hear why.

Oh, I, I, I should have done that. I shouldn't done the differ thing. I don't have difference on this one. Okay. Next one, bench press, your bench press max. Is it closer to 200 or 250?

You know, I don't know. It has to be 250.

Ah, very good.

But I don't know for sure anymore.

Okay. I, I, I figured that was safe cuz if it's like 270, it's still 250. So yeah. Okay. All right. Um, if you're being acquired, so now I'm being bought out, do I wanna be bought out by my competitor or private equity?

Private equity. Okay. Well, clarifying question, are they a great private equity company? Yeah.

Are we gonna be happy?

We'll get to that later in the show.

Okay. Uh, two more. We got your favorite AI tool, Claude or ChatGPT?

Claude.

Okay. Last one. I think I know the answer to this one. Your favorite vacation spot, South America or Africa?

Africa.

Yes, I knew it. Okay, so explain to some people, cuz when they hear that, they do not think of what you're thinking.

Yeah, so my version of Africa has been buying access to all the greatest experiences. You know, and so getting to do the really unique stuff on safari, which is like where you're in really unique environments in the middle of the Serengeti and there's 6 tents and they're super nice and somebody makes you all your meals and you get to go out with the tribe that is like the closest people to original people in the world still left that have no contact with humans. Yeah. Gorilla trekking, like, which is one of the greatest things I've ever done. Like it's the, it's doing all, it's doing a lot of animal stuff and then getting out and hiking with guides and then having really cool like meals and things like that.

The one thing you had mentioned with, uh, you and Tiffany was eating with the, uh, gorillas, like right being that close to them.

Oh, I mean, like I've got video of gorilla, a big giant silverback deciding he's coming right between me and Tiffany and he just gets up and goes right between us. You're that close. It's insane.

Let's go. Cool. All right, well, we'll jump right in. Um, this is probably— I actually think the first couple items on the docket, one area where we might actually disagree. And I think it's actually— if I had to guess, this would be the one area I actually think we could disagree. I think it's going to depend on size of business, but this is from questions of the viewers. And so if you ever have questions, definitely in the comments let us know. These questions today are mostly from actually comments on the last couple episodes. So the first one is about profit sharing as well as partnership or stock options, whether or not to use it, how to use profit sharing, when should I offer stock to a general manager or key employee. And so I'll tee it up for you, Jonathan. I kind of know where you're at on this one, uh, and then I'll, I'll bounce it back here.

All right, negative on stock options. Or ownership. Okay. Positive on profit sharing. That's where— okay.

Okay. So I think the only part then will be doc item number 2. I didn't know profit sharing is something that you did, uh, with the team. And, and so when it comes to profit sharing, what levels do you usually go down to? Like, is it just your operations manager or do you go down to the team?

We have gone super far. And now also keep in mind, whenever you're asking these questions, I'm not always talking about just City Turf. My brain's thinking about what I've done inside business. And so I'm a fan of profit sharing under the idea that it's tied directly to metrics that they are given, that they are trained on, and that they can impact. I'm not a fan of giving profit sharing for companies, the company hitting profit margins or a financial goal, because I don't believe, right or wrong, my belief is it doesn't massively move the needle. Because people often don't understand. And even if you explain it, they can't feel directly how their actions today impact us growing margin 90 days from now. And so there's too much where a person could be slacking off or coasting and they're like, well, in their minds, like, I'll catch up on all this Friday. I'll get this done this weekend. And the weekend comes in, they don't do it. So there's this part of me that doesn't believe that it makes a massive impact because it's not close enough. It's not tied closely enough to their daily performance, which takes me back to— I like, here's the metrics we're trying to move. If you move the metrics this much, that's the goal. This is the outcome that you'll receive. I like that because then they're, they're able to directly impact that and there's no ambiguity about it.

Got it. And so where does profit sharing fit into— when, when does it work? Maybe for example, like an operations manager or someone that is in control of everything with getting the work done, the crew, maybe number 2 in command. What kind of profit sharing are you looking— how are you setting that up for that to be directly tied to a metric?

I predominantly— I mean, when I think of it, the number 1 place that I think about it is around moving gross margin, COGS, Driving out non-billable costs in the business. Like there's a number of metrics like that, that we can talk about. And so those are all operational metrics. That's where I tend to think about it. Um, if I, the next place I think about it is more commissions and profit sharing, and that moves to the sales side of the organization, but there's different types of comp profit sharing you could do on RevOps on that side of the business. But frankly, when I'm talking about this, I'm almost always thinking in terms of operational stuff.

And what does that percentage usually look like? I know it obviously depends on how long they've been with the business or how long, how mature the company is, what size. How do you determine, is this 5% profit sharing? Is it 10% profit sharing? How is that even determined?

Frankly, what I've really done is more goals so that, and this is where it gets more difficult. Because it requires a lot more work on management or the ownership. And that is we're trying to figure out which direct— where are we moving the company right now? What are we trying to fix or what are we trying to improve? And that's the scenario where you define, here are the metrics we're trying to hit. That's the goal. Here's the outcome you'll receive, whether it's— and what that percentage is sort of would depend on the situation. And so I'm When I'm talking about profit sharing, I'm not even always thinking about something that persists in its exact same state all the time. So I like creating goals. And also another thing that I'm a fan of is it doesn't even have to be profit sharing. It's an outcome that the team will, will receive as a company. This is what we're going to do if we all hit this goal together or this department hits this goal. And so I kind of put lump that into the profit sharing bucket as well. Again, it's hard. But the more, I believe the more precise you can be and say, this is what we're trying to do and accomplish. Here's what will happen if we hit it. That's what I most like. Now, if I was doing permanent profit sharing, it would most likely be at the operations level, at more of an operational management level or a COO level. And it would probably be around COGS or gross margin. Uh, but even that goal would evolve. It would be getting to a number. Or once we're at that number, it would be maintaining that number or something like that. And on, and frankly, I don't even know what that percentage would be. I'd have to think through that to give a number because I've never done it quite that way. The other thing that I think has value, but it might be predominantly to me, and this, it's the idea of compensating for cash. So in our case, there was a time where we were trying to build cash in the business. And so you could compensate at— this would be more at a COO level. You could compensate for producing cash in the business that's retained, which that there's lots of margins that go into that one. And then there was a time that we compensated for cash extracted out of the business, which is the ultimate goal of a business if you're not building it to sell. Mm-hmm. In that case, I liked 10%. Um, so all 10% of all cash extract outta the business, we'll share that cash. And I'm not sharing it across the company. I'm sharing it with a key group or individual. So those are some of, there's lots of other ways you could do it, but those are some of the ways that I've thought about it. And, and the way I continue to think about it.

Yeah, we kind of think about like there's, if you're in growth mode, you're gonna be having the goals of the business be much more around revenue, number of recurring clients, et cetera, and unlocking certain bonuses along the way. And then if the, the goal is distributions, what you said, like cash, mm-hmm, then I'm gonna give a percentage of that to incentivize that behavior. Yeah. Um, and so it's funny because like I'm, I literally just built a comp plan today that was strictly based upon hitting revenue targets. While literally another location I have, it was, it's like literally just get a percentage of every quarter. If I take a dollar out, you get X amount of cents. And it's just 'cause like the only reason that business exists is to extrapolate as much net free cash flow as possible. And so I, I'm definitely aligned on the stock thing. I think for a lot of small businesses, there's never gonna be any sort of liquidity event. And if you actually give them vested stock, it creates a big problem when it comes to ownership as well as decision-making, even just feeling entitled to be involved in decisions. It's like, look, you own 5% of the business, like, you're not having a say in this. And so I think if you know you're going to sell, for example, potentially something like a phantom equity, potentially, where like, if we sell, you get the equity. But even that, I feel like so, so many times just a carrot in front of people, And I feel like bad when I, I know that the vast majority of people aren't gonna have a liquidity event. They're not gonna sell. And it's really worthless to the employee.

Yeah. That's how I feel. That was actually one of the points I was gonna make on the equity. It's like even at Service Autopilot, we had never given out any equity. We didn't plan to sell the business. Oh, interesting. It wasn't, it wasn't on the horizon.

Mm-hmm.

We ended up giving some people money and unfortunately, you know, that meant they had to pay ordinary tax rates, which is a real bummer. And so we were not— it wasn't that I'm unwilling to share the money. I mean, if you help me build the company, then, and you're one of the higher-ups in the company, then I think I'm pretty generous. It's, it's so that, that's not really what it's about. It's exactly what you said. It's, it's a couple of things. It's one, I'm not actually building anything to sell it. And again, I was not building ServiceAlpi to sell. We thought maybe it'll happen someday, maybe 5 years from now when we're much bigger than we are now. It wasn't even a thought. City Turf, exact same way. I have no— I couldn't care less about selling that business. Like, let's just keep building the thing. And so it's not even really something we think about now. So to that point, if you give people equity, I get a little worried about their expectation. The other thing that I've seen, I think it's through some friends and then just a couple experiences where, and I don't remember, I don't know where this has come from. It gets, oh, it might be from John, my business partner, who's been at some other tech companies along the way. And so they're like, John, you're getting 150,000 shares of this business. Some employees hear 150,000 shares are like, this is incredible. Like they're so, they think it's incredible.

It's a penny stock. Yeah.

Like, but what's it mean? Like most people don't even know to ask, what does this mean? What percentage is this? What's the market cap? So they imagine they're about to be millionaires and their 150,000 shares are worth a nickel. It's that kind of a thing because the company issued 5 billion shares in the company when they wrote up their operating agreement or whatever the scenario is. So that's where you can also end up with some hard feelings. And so there's this, like, okay, are they going to say this is awesome? Or are they going to say, that's it? I've done all this. That's all I get? So it's real. This stuff's complicated. And the last thing I'll say, is I'm not 100%— like, if you give somebody ownership in the business and they've been working at the company and they do a good job and you're only trying to retain, or you're trying to get them to do more, that really makes me nervous. The only— trying to get them to do more, I'm not convinced. If somebody's been there for 3 years and you give them ownership, it actually changes behavior. I think they kind of are who they are. And then on the retention, I'm not convinced that's even smart because if you decide to build your company bigger, it's not uncommon that you grow out of some of your team members or they burn out. And so did I really wanna lock down that person? So that's some of the reasons I think the way I do on the pro— on the, uh, ownership.

And even firing them becomes a little weird now because like you've given them equity or even phantom equity.

Yeah.

And now you're firing them and like, there's even more hard feelings cuz you're taking away something of value and whether or not that's an arbitrary value is still gonna be held against you likely.

Yeah. Yeah. So it's, I, I wouldn't, if somebody were saying, hey, I really wanna do this, I wouldn't say that's insane. I would just say some of the, these are some of the watchouts that I see and I'm a firm believer in taking care of your team, but there's lots of ways to take care of people and If you've got somebody who has just killed it, like they have shown up and just done the work and they have put in the hours and they did it with no expectation, those are exactly the people that I want to really take care of. Versus there's a lot of people are like, hey, whenever you do this for me, I will give more. Like they might give more for a little while, but they're probably not going to give more for the long term. Those are, those are people that are built differently. And so I want to take care of the very best people and they show them, you'll, you Generally figure out eventually like, okay, these are the people that really deserve this, but that takes a while to prove out.

Yeah, I see a couple like on the, on the smaller side business, like say under $2 or $3 million, I see two big errors. One is definition of profit when it comes to profit sharing.

Mm-hmm.

Like, are we talking on the bottom of the P&L? Are we talking about distributions? Are we talking about after debt expense, before interest? Like, is this EBITDA? Like defining what that is very clearly for the employee. Um, and then also for locations in growth mode, i.e., let's just say growing more than 30-40% a year, giving profit sharing is likely the most demoralizing thing to do because it puts this illusion in front of someone that is impossible when you're growing so fast. Because growth sucks cash. You're buying more trucks, you're hiring more people, you're expanding. And like you talked about last week, hey, if you want to keep growing, I'm okay with a smaller margin. That might be fine for the owner, but if you put in front of the the manager, operations manager, general manager, hey, you get profit sharing. There's this expectation that I'm going to get something. And if you're growing fast, there might not be any profit.

That's a fantastic point right there.

The definition of the profit too is so important because a lot of times it's like, well, the P&L. Well, if you have debt, now all of a sudden your principal paydown doesn't show up on your P&L. And so you could look really profitable, quote, on paper, but have no cash in the bank. To actually pay them a profit sharing. So I did that mistake very early on. I was like, hey, we look at the P&L and you get a piece at the bottom. And then all of a sudden it's like, oh, okay. 'Cause at the beginning when I had skid steer debt and truck debt, et cetera, back in the day, all of a sudden I'm paying out profit sharing when there was no profits realistically after debt service.

Yeah, that's a great point. It also can change the decisions by committing to that. Now you might be changing the decisions of the business. An example would be maybe at the end of the year in our business, we want to spend $1 million in December to pre-buy equipment and pre-buy all our chemical for the year. Now, if we didn't do that, the profits of the business would look so much better. Somebody better get a nice check, but it costs us 20%, meaning we would've saved 20% on those purchases, or whatever that number is, had we bought now. And that's not ideal for the business. And so it's a little bit of my argument against debt in a different way. When a person has a lot of debt in their business, They make different decisions inside the business because of the debt. They can't take the opportunities. They can't prepay for things. They can't— if a great— if a bunch of accounts come up for sale for a great deal, they can't buy them. And so debt starts to impact the decision-making of the business, or taking too much money out of your company too early impacts the decisions you are— your optionality in the business. Well, so does the commitment you make. From a profit sharing standpoint to the team. And so these are big, big questions that require a tremendous amount of thought and frankly, really doing a lot of deep diving to try to expose all of the risks in doing it. So you can kind of like steelmanning it in a sense, like trying to like, what are all the things that could go wrong? And then saying, yeah, these are 9 things that could go wrong, but I'm comfortable with it. It's still worth it. Yeah.

And I think one thing that. Is like there is no perfect compensation plan for every individual. It does have to be individualized. I, I used to very much ascribe to like it all fits in a box. And then after doing so many managers and locations, it's like some people could care less about some of these things. And the goals of the location determine whether they're gonna be more revenue-based goals. Are they profit-based goals? Like profit sharing in theory is not incentives. It is actually a piece of the profit. Well, if you're not being profitable on purpose, probably not a good idea to be like talking about that with the team. Yeah.

Uh, last point, I think I was informed on this very young. So the only job I've ever had, um, was I worked at a software company from 19 to 23, and I was amazingly at that age, I was one of like 4 people in the company or 5 people in the company got 5% profit sharing. And I got a year-end plus I got a 5% per quarter. We never knew how the 5% was calculated. We never actually even knew how the year-end bonus was calculated. And that was real discussion amongst us, the few of us that got that. Like, we just, so we put, I remember putting almost no value in the 5% we might get a quarter because we didn't know how it was calculated. We weren't sure it was being calculated fairly. We can, back to my point, it was a. We didn't even know how we could impact it. Like, we, like, I kind of see how I could impact it, but the sales team isn't doing their job. Like, it was that kind of a thing. It's like, it's not us. I was on like technical sales and then I ran support there and I was on development. I like, I did several parts in that business, but I didn't do sales. I remember clearly it's on sales. The owner will not give the sales team enough of a budget. That was my thinking back then. And I think that really impacted me and everything I did after. Just feeling like it didn't really work.

Yeah. Like even in, in the companies I have, like the only department that we don't have profit sharing is the media team. Sorry, Jace. But, but like the, the, the reason is because I'm the talent and if I make a better video and it gets more views, it gets more clicks, it gets more leads, it gets more sales, but it's not really like if it's like, hey, this video's not gonna do those things, but we need to make it for the content. It's out of their control. In terms of the performance of the video to some extent. A lot of it hinges on me and it's out. It's like, it's like, hey, look, dude, you stunk on this shoot. You, there's no way we're making this a good video. And so I agree with you, like having it where it can actually be impacted by their behavior. Otherwise, you know, might as well just have like a random end of the year bonus.

Yeah. So I want to use that example because I think it makes another point that I don't think we talked about. I've thought about this very same thing. Should I? Because I'm slowly trying to get more serious about this stuff. And as I'm thinking about who I need on the team and I'm getting more help, I've thought about this very compensation model. And I know a couple people that compensate their media teams. Now, interestingly, what I've noticed with all of those individuals is their content has really drifted. So they've built really big channels. But they've gone in a completely different direction. And so in my case, I don't— of course I would love to have a lot of subscribers and it's a, you know, it's a brag— not a bragging number, cause I'm not gonna brag, but it's a vanity, vanity metric. Yeah. Thank you. Vanity.

Okay.

It's, it's kind of that, but so if you compensate somebody for subscriber count or view count or some of those things, you might be incent— this is the point I wanna make incentivizing the wrong behavior in any compensation plan, whether it be commission sales, whether it be profit, they're like everything, pay for performance, every single thing creates an alternative action. Great. It, it does. It's the whole world runs on incentives.

And so we'll, we'll know when you have your video editor compensated based on subscribers, when every 2 minutes there's this bell, subscribe now, subscribe now, subscribe now. Yeah.

And I've drifted off into some kind of other content that's way more popular than home services content with a bigger audience, you know, that kind of thing. So, but anyway, that, that was the point that I do want to make for everyone is as you're working on these models, think about what does it incentivize and what might it also incentivize that's negative? Because that's— that happens. Yeah.

Tying back into what you mentioned about getting to the end of your year, not really knowing how it was calculated. This ties into the second part of the docket and that's open book management.

Yeah.

Um, would it be useful if you're doing profit sharing to make sure whoever you're giving profit sharing to does know the numbers and how it's being calculated, and how far down in the organization would you typically share the numbers of the business?

The answer is, uh, for me, it's 100%. It's back to my story of, you know, if I don't know how it's being calculated and think you can manipulate it, then there's a lack of trust potentially. And so, yeah, I think they should know. Plus, because I tend to, if I'm compensating on a, a, a number at the bottom of the P&L, then I am probably dealing with somebody pretty high up in the org. Mm-hmm. And so that person, if they're gonna be high up in the org and they can't read a financial statement, they might not be high up in the org. I mean, I need 'em to understand a financial statement and they might come into the organization and not understand all that. That's cool. Like we can bring 'em up to speed. I'm a big fan of training. It slows things down, takes a while, but I'm totally cool bringing somebody up to speed on that. But, um, the higher you are in the organization, you need to understand that stuff. So yeah, the answer, I think, to— I remember your questions— it's yes to both of those. Yes, uh, they need to know it.

And actually, I think I'm off base on whatever your second question was, but the second part is like, how far down the org chart do you share the numbers?

I, I, this is— I'm not a— I'm personally not in the camp of open book management. But I wouldn't tell somebody— it's not an opinion where I'm like, you're dumb if you do it. I have no negative— it's not that. It's just for me, I feel like it's a little more trouble than it's worth. My case in point, I've had hundreds and hundreds and hundreds of employees. It's very frustrating to get people to max out their 401s to the point that I will match. I want to give you this money. I want you to max out your 401. I, and like the amount of work it takes for a lot to just like help people understand why they should do that, how to think about their 401, how to invest it. What, and some of these things of this sort, it to me informs the fact that most people aren't super financially literate. And even we, like in Service Alpite, we used to have somebody in our organization that would do lunch with— we, a variety of people would do lunch trainings. You could come to this lunch training on financial stuff. We'll teach you about these things inside the business. It was hard to get people to attend a lot of the financial stuff. And, um, and then for some people they just don't like it. I understand it doesn't stick very well. Like they understand how their basic finances for their, their own, uh, life, but not so much at a company level. So I just found that trying to teach it through the whole organization. Now I never tested it. I, this was an assumption I've made. Trying to teach it through all the whole organization, like some number of people, they're going to be all in, they're going to be great. And then other people, not so much. And so my approach, and again, I want to be very clear, I would not talk somebody out of this if they want to do it. It's just, it's not for me. My approach is that I want to have you under whatever part of the business you own and you work within. I want you to understand those metrics. That part of the business, how those metrics roll up to the broader part of the business. And I want you to be trained on all that stuff because again, you can impact that. But I think people get very confused when we talk about dollar and percentage numbers around net profit, EBITDA, whatever number you want to use. I think it gets very confusing for many of the points you articulated earlier. Um, and I especially get scared of dollar numbers. So if, if we were to say, hey, City Turf made $4 million this year in profit, well, I didn't, I didn't put $4 million in my bank account. There's a lot of retained earnings. We invested it here. We did— I mean, there's all these things we're doing with it, and that can get very, very confusing. So then if they see Jonathan in a Porsche and they're like, where's my money?

I got Mercedes, the Mercedes AMG. That's what it was.

Actually, I wouldn't even ever buy one of those, so, um, But, but for me, if I buy one, I buy the Mercedes over the vet. So, um, anyway, I'm, I, I'll kind of try to wrap that up and just say, I'm, my summary would be, what part of the business are you in? I want you to really understand the numbers of that part of the business and how it helps the broader organization. We want to train you on this, but I don't really like getting to the numbers at the bottom of the P&L. And I do want you in the organization to understand how you can impact the company as well.

Yeah, like for me. A part of it was at first when we did, because we did open book management, we give profit sharing all the way down to the lowest level of the team. And so, uh, again, I'm talking home services, like my locations, not necessarily every other department. Okay. But what we do is like, it's P4P, pay for performance. It's very individualistic. It's like, if I work hard, I make more money. But there's the, the part that we were always lacking was the team component of like, hey, I need to help my team out too. And I'm caring about the overall, that everyone's trained up, that we're all efficient overall for the sake of profit sharing. And that's where we were able to really try to consolidate the P&L to where it is understandable. It's on one page. We did like monthly meetings where we'd, we would go over it, but we only found they cared if we were giving them profit sharing. Like if we, when we did like optional meetings back in the day, it was like a couple people would show up. Whereas once it was like, hey, you get a piece of this at the end of the quarter, assuming you show up. And you've been on the team for some period of time, you get some, some, a piece of this. Then they started to care about, okay, well, like you spent, yes, you got $4 million. It's also like we spent $500,000 in fuel last year. You know, we spent hundreds of thousands of dollars in insurance. And then when we do our safety, we always just try to tie it back in our meetings in like safety meetings or if there was callbacks or damage cases like, hey, this damage case, kind of comes out of the pot for everyone. And so I found a lot of solace as we started becoming really profitable knowing that they got a piece of it. So even when I wasn't there, they were still fighting for the bottom line. And that was always my, like, when I left, we started making more profit. And in part it was because I started giving, I got a little bit more loose with like general manager, estimator, the team out in the field getting a piece of the action. So they were just fighting for profit all the time. And it was a way to snuff out not just low performers on P4P, but also people that weren't team players. Because that's what they were trying to shoot for at the end of the quarter. And they did care about the P&L now that was hanging up or in a meeting because it meant something to them. And we would give out the big bonus checks like, you know, it's $1,000, $2,000 a quarter for a technician means something. And would I, would I prefer that they put it in a certain way, like a 401, like, hey guys, maybe we should invest that random bonus that you didn't expect. However, I just looked at it as it was a way for me to be able to tell them that as the business made more profit, you will also. And then the thing that for me is like we gave them a roadmap to become an owner. So like we did the 3F program, the franchise fee forgiveness. They become a technician for 2 years, then you become a general manager, and then you can actually join the franchise for free. Like we waive the initial fee. And so it was also a way of saying like, hey, there's more for you. This is not a dead-end job. You can get to the next stage of your career. And we create like 21 stages to get all the way to there. So that they could progress in their career. And then the profit sharing for us just made it meaningful.

It's like, yeah, it was tangible for them and it was training for somebody that might grow into a franchise owner. So that makes a ton of sense. Now, do you still do it?

We do. Yeah.

Okay. Okay. I thought you— I thought I was hearing language where it sounded like maybe you'd stopped doing it. Okay. You know, as you were talking, one thing I thought about too is let's say I was building a new company. It doesn't matter what the business is, and I'm gonna keep it to 20 people or something like a smaller business, right or wrong. My, I theorize that I would be more open to it in a smaller organization than a big organization.

Yeah.

Especially one where I'm more directly involved in leading it, or I've got a really strong financial leader in the business. Um, I, for whatever reason, I just theorize that would work even better.

You know what's funny? So I agree with you and that's why I originally opened up the question saying I think this size of business will have a lot to do with this. I agree with you. Um, what's funny, one thing I heard, I forget who said it, is like the largest businesses in the world are open book management cuz they're public.

Really? Oh, okay. Yeah. But, but who in those companies is reading the P&L?

Sure.

Nobody. Nobody's reading it.

Probably only if they have stock options.

They probably, a lot of them probably still don't understand it. They're just asking somebody else on the team, what's the, what's the strike price or what's the option price? You know, whatever.

I think to your point, as it gets more complex on the financial side, as well as the deeper the org chart gets, it starts to get where they do feel disconnected. Because if I'm one of 100 people and I work harder today, is that really going to affect my quarterly profit sharing? And we actually did quarterly profit sharing before we did P4P, and it did not change behavior like P4P, because P4P is like, if I make more money, if I work harder today, I make more money this week, like on this paycheck. Whereas when even for quarterly profit sharing, for most entry-level technicians, that's too far away for them to even change their behavior today is what we found.

Something else I thought about that could be impactful to this working in a small organization is so much of what works or motivating behavior, it of course starts at the owner. It starts at management. Management is so important, but it's also what is my coworker doing? So if you're, there's a, in a smaller organization where there's a mutual respect, you don't want to let down your other team members and you're highly visible. As the businesses get bigger and there's departments, people can hide. It's easier to hide. And so in an environment where everybody knows the goal, they understand, in this example, the financials, and they're all hyper-visual, like, I know if you're doing your job, I know if you're not doing your job, all those factors together, I could see how it makes it all work much better.

How did you, just as you expanded even on the software side and you had like virtual employees, less in-person, as well as a larger org where people can hide. How did you deal with that mentally? I know like once you started the software side, you already ran big businesses, but was it ever difficult for you to know that people can hide in the org, how they can hide in the org, know that it's probably happening, but that you still have to stay focused on your job as the CEO, as the founder, and not get bogged down by the fact that yes, there's gonna be some waste as you have a hundred-plus person team?

I truly never perfected that or got good at it because we sold, we were 100% in-office company. And when we sold, we sold before COVID And so it happened to us after we sold the business and that's when everybody went remote. And so I can't even remember the different things that we were trying to figure it out, but frankly, I had already sold the business and so I never had to figure it out. One of my big observations was If this had happened and we still owned the business, and why I say it that way, that means I have complete control. While I was still the CEO of the business for a while, you have pressure above you. You know, and at one point, right after when COVID happened, Advent, the private equity company that bought us, they made us fire 11% of our company during COVID They made an Advent, like one of the top performing of all private equity companies that exist. They took Worldpay. They've done all this stuff. They're massive if you just look them up. They went through their whole portfolio and made all their companies do it because they, at that time, were very concerned about what was going to happen. We had talked last week about Rule of 40. We were like a Rule of 55 or something like that when we sold the business. It was a growth investment. Where I'm going with this is just to make a point for people that think about selling. It's like maybe a little subtle side point. We were, it was, we were a growth investment. As soon as we sold that business, I was already working on deals to go buy other software companies. So we, and we were gonna like, Service Autopilot was gonna, supposed to go grow, grow, grow and acquire. So that's what the deal was with Advent. We, it was a growth investment, go big. And, um, and then COVID happened. It changed everything because didn't know where the future was going. They got scared. They made everybody in their portfolio fire. A percentage of the company. In our case, it was 11% of the team. That was a pretty big beatdown because we were— the reason I said Rule 55 is it wasn't— there's nothing called Rule 55, but we were profitable and we were growing very fast. And so to have to let part of the team go, that was not a decision I made. That was a decision that came above me. And so kind of got off track, but I'll tell you why I said that for people, because I think We're going to talk a little bit about maybe selling your company someday today. Like, you could sell to the very, very best buyer and you never know what's going to happen to you. You cannot predict it. There could be any number of things that could happen. And so, in this scenario, when we went remote, I felt like I had some say, but I also felt like there was pressure coming down from above. For example, I would not have let the company stay remote nearly as long as it had. I would have brought them back because my biggest learning was if this was still my company and I had 100% say, if we were going to live in a remote world, I was going to have to let 25% of my company go, uh, some big number, and replace them. Because my observation was to build a remote company, you hire people that are capable and experienced doing remote. You don't take people Like some people can make the transition. A lot of people cannot make the transition. And the people that couldn't make the transition, while they might be great at their company or their job, can't be at my company more. I need to go get a different person that's, that's capable of working in a remote environment. So long story to kind of give you, make a couple points there, but that's my biggest memory of the remote problem is I don't think a lot of my people will ever be able to make this transition.

And so how did you handle that? Because like, did you just, everyone just stayed remote? After that, like, I, I, I don't necessarily grapple with this a lot more because we hired and most everyone of them were remote, like on the tech, the tech side. And the nice thing is I'm able to, the talent pool is so much bigger when I say, hey, you do not need to live in this city.

That's incredible.

Yeah.

I feel like I'm gonna sound like the old guy. Like, I want the companies to be back in person and the biggest trade-off is you may not be hiring the absolute smartest person. But this, the point I'm about to make also is another example of the other day. It's like, $10 million company or $10, $1 million companies. What market are you in? I'm in Dallas-Fort Worth. There's a lot of great talent here. I didn't build my company in Fayetteville, Arkansas, where, yeah, I'm going to probably build remote there, or more likely I'm going to move and I'm going to build my company in Dallas, Texas, or Boulder, Colorado, or like some market, Salt Lake City, or some market that's strong if I'm not in California. And so, the point here is that I'm very— the way I think about it now, for me, I'm very attracted to working with a bunch of younger individuals. And because I like— I know everybody's like, young people don't do anything. Okay. The right ones do. And I love the energy and I love the raw horsepower and the brainpower. I love the people that have— like, yeah, on one hand, I want to be able to teach them, like, here's best practices, but I also want them to try new things. I don't want to do what we did for the last 20 years in business. Like, what's the new idea? That, that is my biggest concern about remote. It's like, how do I bring a 23-year-old into my company and he or she is working in their bedroom at their house and we're not having conversations in the break room. They're not being part of the lunch meetings. They're not being part of just observing everything else that's going on in a business. They're not seeing what a guy that's 50 years old how he operates and at the speed he operates, and they're not learning those behaviors and modeling some of them, I feel like I lose all of that. And so, um, that's my biggest negative on remote. And then I'll, I'll say one more thing. Going remote with like John, my business partner, who I've, who I met him at that software company I worked at when I was 19 years old, like we're practically married. I mean, I know what he's thinking. I can tell when his face turns red exactly what that— I mean, I know everything. And so, there— and I had— I knew how to work with Brian and Tim and all these other guys on my team. And so, when we went remote, no problem, no problem at all because we had worked together for a long time. And so, how do you build that? We built that stuff by being— going to war together, sometimes at the office, sometimes staying late at night. Sometimes doing system pushes till 3 o'clock in the morning. Like those, we built those relationships and, and not only relationships, but we built that knowing how to work really fast with the person where like you can just build stuff fast. You can design stuff fast. You can get to the root of problems fast. Whenever there's a disagreement, we can walk out of the room and be in complete disagreement. We're totally cool. Like, and so I don't know how to build some of that remote. I know remote wasn't one of the talking points here, but. This is kind of interesting. Uh, and so I'm a, I'm a fan of remote, but I think you have to build your company in a completely different way if you're gonna do it. But if I could, in my perfect world, you'd still be building in the office.

Yeah. Like the, the franchise, that leadership team is all in person. And then the software side, most of them are remote. And so the dynamics, like I've been able to like directly compare and contrast pros and cons on it. And so it's just very interesting. But I was just asking about how, when at a larger size business, when you know people can hide, especially in the remote setting, to your point, how did you, how did you handle that? I know at that point you didn't have ownership or control, and I assume that, uh, there was less care once, you know, they say, hey, cut your team. Um, but how did you deal with the fact that now you're in a larger org, people can hide, uh, and especially behind a screen?

It, to me, it wa— we, it was really challenging in a few places. So as an example, on customer service, you could still measure it. I mean, because we do, we have all these metrics on the customer service teams. We record every single phone call. We do call scoring. We were doing call reviews. We were doing all this. So you had to, you didn't lose any of that. But man, people were trying like crazy to hide. Customer service is one of the big examples where you were either built to be remote or you were not. That was a great example where I felt like a lot of people needed to go. You could hit, you could find things where like, that dude just hung up the phone when he answered it and he did it 6 times today. It's like that kind of stuff. So you could still find that and get those people out of the business. Commission sales, sales, same thing. You, you, you could work remote, you can measure it. It gets a lot more hard, difficult on the technical writing side, on the marketing side, on the development side. And so, but even a developer can hide at their desk. And so we had years and years earlier committed to Scrum and Agile. So better said, Agile. And so we were doing daily standups and we were literally scoring our projects. So I don't know if you guys do this, but it's the idea where you familiar with it, where you like, here's the project we're doing, we're breaking it down and then everybody's voting on this is the size of the project. And then the size determines how fast we'll get it done. And then we do a Scrum or Kanban board. Okay. We were doing all of that. And so again, you could keep some level of accountability there. Where that slipped was, uh, that it was management. So John left the organization and when John left ServiceAlpi, like really fast after COVID happened, he's like, I'm not liking this, you know? And so he left the business. And so. When some other people out, somebody outside the org came in to do some management, they weren't as hardcore about being in those meetings. That's my perception. And so management was at fault in that scenario. I had some managers inside the company. I'm not saying they were at fault. It was a different scenario. But so I gave a variety of different scenarios because you can see where some of them metrics will allow you to keep manage, to know what's going on. And then some of them, like marketing and writing, it's really, really hard to know.

Yeah. And I think for most people listening, they're probably more in home services. And that's the importance of tracking efficiency scores, budgeted hours, clocking in and out of jobs, because it's harder for people to hide. It is, to your point, as the company grows and you have multiple levels of management, you have a marketing department, you have a sales team, people can start to hide in the organization. And knowing that that's going on can sometimes be draining, like mentally.

Yeah. So let me give a better answer on that specific to home services. So the way I think you have to do it, what you just said, the metrics, we've got to really make sure now that we understand the key metrics of the business in those areas and we're tracking them. And that will kind of tell us what's happening, especially when you have multiple people in a, in a division or a part of the business. And you can tell this person's handling 48 calls a day and this person's handling 9. Like you, that, that you could see that kind of stuff. The, I mentioned the word Kanban spelled with a K or the word Scrum. I would look that up. So now let's say you're managing parts of the business. So we're not talking about the field, we're talking about in the office at that level or management. How do I know what they're doing? How do I know if they're being productive? This make— what I'm about to describe is what a good company does anyway. In a remote environment, I think it's even more critical. And so the basic idea at, at a very simple level is every day or 3 times a week, we're doing a standup meeting with our small team. So like, let's say it's the managers of the team. So maybe you have 4 managers in the company. So we would literally be standing in front of a computer screen. With a product like Trello on it, or we'd be standing in front of a whiteboard and we'd be having a conversation amongst that group at the beginning of every day. Each person, what did you get done yesterday? What are you doing today? What are you gonna get done today? And what are your bottlenecks? And so what it does, and there's other ways to do it, but that's a very elementary way to do it. So what it does is it creates that example I gave earlier where You can't hide in a small team where if you're not doing your job, your neighbor sitting next to you knows you're the one costing us all money right now. It's that same thing. It's like, this guy is never prepared when we have these meetings in the morning. And every day he says he's going to do this thing. And here we are. That was Monday. It's Wednesday. Monday's stuff still didn't get done. And so you create this version of pressure and accountability and visibility. You can do that physically, but you can also do it in a remote environment. So that would be one way I would tell you to try to manage remotely. But it creates more work for the management team and it's not easy. Yeah.

And one, one thing that's helped me a lot is when all those meetings are recorded, the ability for AI to be able to like synthesize that data back to me. So I, I don't have this nagging notion because I have not been looped into every meeting. People are hiding or they're not doing work. Like that was a big thing for me when so much of the team started getting remote and they're expensive.

Yeah.

And when you're like trying to fund the business, it's like that is in the back of your mind. And it's still something I, I still grapple with cuz I'm like, every penny should count. And so one of the way that I've been able to handle that or like put a damper on that emotion is getting Codex to like run an automation. Hey, take all those scripts of those daily meetings, give me a quick synthesis so at least I know, hey, what are they working on? What's the current bottlenecks? What did they get finished? And have much more of a sense of progress and trust. Cuz that's the part that I don't want to jeopardize is like me looking over their shoulder like, hey, what did you do yesterday? Right. And that's the part where I'd never wanna become that kind of person.

Yeah. And a Scrum meeting, as I described, doesn't need to necessarily feel like it's looking over your shoulder. It can feel like a team thing. And it can also feel like, what is, what, no matter how good an organization is at communicating, everybody, pe, not, people will say, we don't communicate enough in this organization. And there's a real, a lot of reasons why that will happen. Or they'll feel that way, or they'll say that in the background. There's a lot of reasons that happens. Well, in the scenario I just described, it forces that communication. So the manager is in the Scrum with the team, and their job is to eliminate bottlenecks so everybody can go faster. So the team every day has a chance to describe what the problem is, what we're dealing with, and what we need help with. And so I like it from that standpoint as well.

Especially in, in organization, I found it was almost hard for me to, to switch a little bit was when it comes to like home services, you get work done, you get paid. And so if anyone was performing less when it came to output in terms of work, we, I could see it in the numbers. When it comes to something like software where it's a recurring revenue business, it's like it doesn't show up on the P&L.

Like, right.

The revenue just is gonna be doing this and it's like, what degree do they change that might impact the, the revenue and, and like monthly recurring revenue. But it is so much easier to hide because it's not tied to, I put more bricks, I get more money. It, it's less, it's less quantifiable. It's like, how do you quantify creativity?

Yeah, it's very difficult and it just requires pretty strong management was my belief. Like somebody that's just push, push, push all the time. That's what I conclude is required in development. It's not putting a developer down. It's not, it's like, it's not like, I, it's not being negative on anybody, but it's, it is so easy to coast in that area potentially, or refactor your code, or do all these other things that aren't really necessary. And so if you've got somebody push, push, push, it tends to keep people moving faster, more focused.

I want, I want us just curious, cause we've been, we went down the rabbit trail of, uh, virtual and, and remote. Um, where to invest money. This is one of the questions from, uh, last episode. "For a business doing between $1 million and $10 million in annual revenue, they have profits, where should that money be going?" I think this one's a little difficult 'cause it kind of depends. Like, I think for both of us it'd be like, if you have excess cash and you know where to deploy it in your business that's gonna unlock the next $5 million, you should probably do that. It's probably the best investment. But let's assume for a minute like someone either A, can't grow 'cause their market, or B, they don't want to grow number of employees or liability. They're like, "Hey, I got a good business. It's printing, it's 25, 30% profitable." It's being ran. I'm hardly there. What did I do with the excess cash? Um, what would your perspective be on this one?

And there, okay. The way I think about this first is there's, there's some amount of cash that is required and it is probably a bigger number than you might expect or think that needs to be liquid. And the reason I say that. Is your best asset that you have in life. And by asset, you know, we're talking about you've got a business, you might have a stock portfolio, you might have some real estate, whatever. Those are all assets. Your best asset is your business. That is the, as they would say, it's maybe not a cash cow, but it's the cash cow in your scenario. It's like the thing that has to be protected at all costs, because if that ends, you've got a problem. And so when you have excess cash, you first need to— and as you're investing that cash, it needs to be liquid. And liquid means that I can get to it immediately if I need it, because that liquidity allows me to protect my most important asset. If something really bad happens, I can put money into it to make payroll. I can put money into it to— maybe it's even an opportunity comes along. To buy a bunch of accounts, that is just such a great deal. Like, it's an absolute no-brainer. So you've got the cash available because that's going to be your best return on money. So, so the first way I think about this is I can only invest my money in things that have a lot of liquidity. And so when I think about liquidity, that's not buying real estate. It's not buying private equity, which is not something most people are going to do at this level. It's not investing in anything like private credit or any of these things that will lock up your money. So you've got to invest in things that I can get it tomorrow. And so that pushes you towards Treasury bills, your money sitting in a money market account, uh, long-term bonds, uh, stocks, things of that sort. And so for me, my default would be some amount of that money, frankly, is going to be in something closer to a money market fund. Or it's going to be a lower interest paying thing, uh, device, but I know for a fact it's not going down in value. And then some of that money can be put into, for example, an S&P 500 index. The risk there is you've got the liquidity, but what if you need that money? What if the reason your business is down is the exact— it's, it's all based on the fact that even the stock market is down. And so now you're taking money out when it's down. So the strategy that I have used is to keep a lot of— over the years, because my businesses were— I mean, for a long time, I've had— if you accumulated the revenue of my businesses, even going way back, I forever— I've had at least $20 million a year in revenue coming in, going way, way back in time. And so that's a lot of business to protect. And so I had millions of dollars sitting in outside of the S&P 500. And then after some amount of money, then I was investing in the stock market. And I don't know if we'll— you can ask me about this, but I also use some insurance products, which I'm almost afraid to talk about because I tend to be highly negative on insurance, but I use some insurance products to help close this, solve this problem for me. And so those are— there's really not many. I'd love to hear what you say, Mike, but there's not many more options than that that come to mind if you're trying to, to solve for liquidity. Now we can solve— we could talk about investing money when you don't need liquidity anymore, but those are the things that come to mind for me.

Yeah, like a lot of times it happens almost every time the second half of the year when owners in August are like, hey, we have cash, what are we supposed to do with it? And a lot of times they are saving up for like their next expansion or the next spring rush to expand the business, knowing that if they have powder dry during the spring rush, customer acquisition cost is lower. That's when it Ideally I can expand at that time. And so I've actually kind of created a bit of a framework. I haven't, I don't think I've ever shared it before. It's like anything under a year, if I need the money within a year, I'm probably just doing high interest savings. I'm doing, uh, money markets. I'm doing maybe some short-term treasuries cuz I need the liquidity to your point.

Yeah.

It really comes down to how soon do I need the money? I think a lot of times people think they don't need it in 10 years when in reality they actually need it sooner than that. But if you actually have a purpose for the cash to be invested in the business, which to your point is the best investment, or like the cash cow, if it's under 12 months, usually I say very liquidity, high liquidity, uh, in those sort of lower interest rate, uh, products. If you're gonna go like 12 months to 2 years, that's when you think you'll need the money. That's when generally you're pretty safe putting in the S&P 500 or index funds. Because over the course of 24 months, I forget the exact stats, like 93% of the time, the market's been up.

Yeah, after 2 years, you're very, you're generally very safe.

Yeah. So like, if I know I'm holding it 2 years, great. If it's above 5 years, that's when I start thinking real estate, because like, if I can leverage it, and get 5 times the, the principal, then that starts to become a thing. It— I see so many people do the real estate thing, and then they need the money in 16 months. And so we talked about last week is like, now your down payment's locked up and now all of a sudden you're investing in a completely different business, which is real estate, which moves much slower than your business. And now you have this huge opportunity that you can't take. A competitor is going out of business. You could buy the thing for pennies on the dollar, but you have $200,000 wrapped up in some piece of real estate that you could probably just go rent someplace else, honestly. And so that's kind of like my, my quick tiers, like really how long Will I be keeping this money set aside from being put back into the business?

Yeah, I think it's a good framework. I, I— so when I was young, I thought I was gonna buy real estate. I bought my house, first house, when I was 22, and I bought a small apartment building when I was 23. And just small, like 6 units, they call it— you'd call that a little, little bitty apartment building. And I thought I was going to keep buying real estate, but then in the businesses, they, you know, as my business stuff started to work, or maybe didn't work and set us back, and then I, you know, eventually it started working, I could never quite figure out on the real estate thing two things. One, I was going to tie up a lot of money and I just always felt my businesses would be the better opportunity. And so, I was always a little afraid of that. And then, I learned with my small apartment property that that's a business in and of itself. And so, I didn't do real estate because I thought it was too big of a distraction, but that's actually— I always thought I would have had built a big property portfolio. I always wanted to do that from very young. I like the real estate thing quite a bit, but for those two reasons, I'm still a little negative even on real estate, especially because of the business thing or because of the— it's essentially a business you're running. And if you just have one or two, it's a distraction. It's back to my philosophy of building a bigger business. Now, I think if you're not building a bigger business and you're like, hey, I'm just building a business to a million bucks, we're going to extract as much profit. That's a completely different scenario now. If that business is running well with a strong manager and you've done what you've talked about, Mike, like, great. If you want to do another business, which is essentially real estate, go for it. That would be my attitude on it. The question I'd lobby back to you is, okay, you talked about timing. So if it's under a year, we want to keep it liquid. How do you think about the amount? So for example, under a year, how much money Do we want to hold in the under-a-year account?

I think it's whatever I need, I know I can use. Let's just say you have $1 million set aside. I need $200,000. Well, that's the money I'm going to keep liquid.

By need, you mean for operating the business?

I would keep that separate. Like I'm thinking savings versus like an operating account.

That's how I was thinking about it too. Okay.

Yeah. Like I think this is money that like I don't need to operate the business, but there's an opportunity that's coming next year. For example, I'm going to buy 3 more trucks and get 3 more cruisers on the road. I'm going to launch a new service. I'm going to go into a new market. I'm going to invest in a marketing manager that I know I'm going to lose on overhead for 3 months. That's the type of thing like, hey, that's a future investment that I know in my business is a positive thing. I need to set that money aside. It's earmarked for that investment. Anything besides that, that's when it's like, how far down the road am I going in terms of investment horizon?

Yeah, I think the 1-year, 2-year, 5-year, that's— I think the way you described it, it's quite safe.

Yeah. Like the one, the one thing I like about real estate when it comes to excess cash is so many of times it comes to investing, it is simply time in the market, like Warren Buffett always says. And the thing about selling real estate, it doesn't— it's not fast. Whereas I see so many people being so, uh, responsive to something happening in the market and they're selling at the bottom. They get emotional with selling in and out of index funds. And you and I thinking like, hey, that money's there, it's just forever, it's there for years. Whereas a lot of people, it's like, I pulled the money out, when I get afraid, I see the headlines, I pull the money out, and, or I stock trade. And that's where I see as not only a distraction, but also sometimes the, the ability to have real estate just where it's, it's not as easily liquid is sometimes actually the reason why real estate becomes the huge part of someone's net worth. Or like the vast majority of real, of, you know, millionaires have real estate. Well, it's because if you just hold any piece of property for the past 10 or 15 years and they just didn't sell it, equity has built. And so I think a lot of times when it comes to something more liquid, the problem is people do buy and sell it.

Yeah, the stock market. Great point. Stock market does not work for most people for the exact reason that the psychology of running a business does not necessarily translate to the psychology you need to be an investor. And it just got so pounded into me from a young age, and because I love finance and reading. The destruction that is done trying to move in and out of the market. But I promise you, I have all those tendencies. I can't tell you how often I'll think, like right now where we're at in the market now, it's like, dang, should I be cutting back my allocation? Like I do it all the time and I eventually talk myself off the ledge. I think the data is something like if you miss the 10 biggest days in the market, you lose like 40 or 50% of your gains. I mean, it's, it's It's like, I've tried timing crypto. I've tried trading in and out of so many things. Like, it doesn't work. It doesn't work for anybody. Like, every once in a while you'll get lucky, but on the whole you don't. So you make a wonderful point that if a person is going to get in and out, you should not be in the market. One thing I will tell you about the market, if you are interested in them, if you're like, hey, I'm interested, but it does scare me, I will tell you that If the stock market ends and stays down, every other investment you have is trash. There are only a few non-correlated investments. Bitcoin is massively correlated. Crypto's massively correlated. Real estate's correlated. Like, you can go down the list of private equity is correlated. It's all correlated. Maybe gold, but, but, but like core gold is a non-correlated asset, meaning they move in different directions. But then there's a different problem. People have to raise capital because they put margin on their investments. So they put margin on real— they use leverage to buy real estate. They use leverage to buy crypto. They use leverage to buy stocks. And so what happens is when everything comes down, people have to raise cash to satisfy margin. We're currently sitting at a place where margin debt is— I don't know on a percentage basis if this is true, but at a dollar basis, I believe we're at the highest place we've ever been. On margin debt right now. I think that's factual. So what happens is when asset prices come down across any of these categories, people need to raise capital. And so they'll go to things like gold and they'll sell that down. So you might think, oh, well, if the stocks drop, I've got my money over here. I'll just, you know, that asset will do great. And it might, but if it's a big sell-down, that asset will probably come down as well. During COVID bonds, who are supposed to move the opposite direction of stocks, they all came down at the same time. People got crushed. And so I just want to give a little context on that. But the big, big, big giant point I want to make is if you're scared of the stock market, the stock market is the key to everything. It is the key to everything. And so you could say, well, I'm not going to do the stock market. I'm going to invest in all these other investments, they're safer. The reason they feel safer is because there's this thing called mark-to-market. Mark-to-market is where we're constantly getting an updated asset price. My private equity fund is worth this amount of money. My real estate property is worth this. It'd be like if every day you knew the exact value that somebody would pay you that day for your house. You don't know it, but your house is really fluctuating and all assets are really fluctuating. And to your point, one of the things about commercial real estate is you get trapped in it. So you can't sell when you get scared. Also, you don't know the value of it. So you don't live in panic or fear of panic. But with the stock market, you're seeing it fluctuate every single day and you got people talking about it all the time. And so this is really, really critical. And I say it just to give you a little bit of confidence. If you're interested in the stock market, hopefully that gives a little context on how it works, but also it's really important to understand it's not— it's actually one of the less risky things. We're going to have a big drawdown here at some point. It's coming. But private equity is down right now, and people don't understand it. All these other investment classes are actually down. Office buildings are down. There's a lot of stuff in real estate that's not in a great place right now. I mean, a lot. And so, people don't realize it because they don't have to sell it. So, a little bit of a diatribe, but I really, I'm a fan of the markets, and they are scary. And so, for some people, I think they would do wonderfully if they were in the market. I'll say one last thing. Do you really believe that the United States government is going to allow the markets to collapse? Where is all of everybody's money in this country?

All the voters are.

Yeah, but there's 401s, there's IRAs, there's retirement. It's like so much money. It's so much of the people running the country. This is where the money's at. Like, consumer confidence is based, or like so many things are based on this. The government will bring liquidity to the market. They'll bring down interest rates. They'll do whatever they have to do because This is the first thing they want to revive. So it's a little bit of my thesis is I'm highly allocated to the market, if for no other reason, I do not believe for a moment that the government is going to be like, ah, we don't care about the markets. They care in a massive way.

Yeah, absolutely. I think the number one way to get Trump's attention is basically the market going down for about a week solid and all of a sudden we will make things happen on tariffs. We will change.

Yeah.

Yeah. All of a sudden we will open up the Strait of Hormuz or whatever it is. So, okay, cool. Let's move to the next one because that kind of ties into 401s, IRAs, retirement. I think a lot of times people underestimate how much they need to actually retire. I know you've done some math on this, so I'll tee it up and hand it over to you.

I really love this, what I think is a very simple concept. And the concept is that you have a bucket of assets, you have a business, you have stocks, you maybe have some real estate. You have all these different assets, and let's just ignore the income. Well, really, we don't want to ignore the income. Actually, forget I said that. Don't ignore the income. You just have assets. And so if you add up the value of these assets, like let's say that you have, and I know this is a big number, but for simple math, you have $10 million in assets. Then there's these rules that have been backtested. For like in all different time periods throughout history. And so one, there, there's two numbers, 3% and 4%. So the idea is that it's been highly backtested that you can take, you can spend 3% of your asset's value every year and not run out of money. Some people will stretch that to 4%, and even that's backtested and held up really well that you can spend 4%. Those numbers are, uh, just that 1% shift is very meaningful. I tend to say, because I'm conservative in everything, I like the 3% number better than the 4%, but the 4% has held up. So the gist is that if you have $10 million, I can take 3% every year or 4% every year. So $300,000 or $400,000, I can take that out and spend it. And my, if I'm invested, Now, I can't be invested in just Treasury bills that are returning 2.5%, but if I have a mixed bag of investments across lower-paying bonds, money market funds, the stock market, some amount of REITs or real estate, maybe a few asset classes where we're getting a blended average of maybe a 7% return or something like that, then I can spend this 3% or 4%. So if you buy into that belief, and I buy into it because it's so widely tested, but we never know what the future is going to happen in the future. Based on just knowing that, you can project what you would need. And I tend to talk in terms of like going for it, like building the thing you want in life. That's the great gift we've been given by getting to build these businesses. So, like, what do you need? Are you wanting to— do you need $100,000 a year? Do you need $250,000 a year? What's that number? It's probably more than you think it is. Especially depending on if you're pretty young and you don't have kids yet and you, you don't know, you haven't even experienced healthcare and kids going to college. Like there's things that might be coming that the number is actually going to be more than you think it's going to be. All right. So let's just say your number's $250,000.

Okay.

So what you do is you multiply $250,000 times I want to say this correctly. If you multiply it by 33, that is a— is that the 4% return? No, no, it's a 3% return.

Yeah.

So if you go with 3%, which is conservative, then you just take your number and multiply it by 33. So I think that's probably— I think it's around $6 million. So in other words, if you want to live on $250,000 a year for the rest of your life, you need to save— I think it's just over $6 million. And have that $6 million invested in a variety of assets that produce around 7%. So just remember your number times 33. If you want to be a little more aggressive, but the data still holds up, then you take your number, $250,000, and you divide, or you multiply that by 25. And I don't remember, but I think that number is something like $8 million, or maybe just a little over $8 million. So in other words, and that's how you calculate it. It's really that simple. That's how I like to think about it. That was a lot. Did that make sense? I want to pause there and say, did that make sense?

Oh yeah, use the 3% and 4% rule basically as if you were drawing down on your investment throughout your time in retirement. One thing that I think, um, we do at Augusta when they're doing the training is we don't even touch the principal. It's like if you lived off the investment principal and only off the, the, you know, let's call it dividends or the returns, 4, 5, 6%, whatever that diversification is. That compared to what a business could do in, in terms of having systems, having management in place that can kick off that same kind of net free cash flow passively if you build the business over the course of time. And we kind of, we do this comparison where it's like, hey, what's easier? Getting the $8 million that can, you can get the $300 grand, or building a business that does $3 million, does 20% in profit, and half of it you take as distributions. That's also $300,000 a year. And so looking to your point, like, as the business as your investment vehicle for you to be able to retire is kind of how we look at it.

I actually do the exact same thing. I think I might even have a Five for 50 video on this. I completely agree with the way you guys are talking about it. And so I— if you can do both, killer.

Yeah.

Oh, and by both, what I mean is you build the portfolio of investments that Maybe you never have to touch them, but you also have the asset that is the business. So, if you, just to build on your point, like put actual numbers to it, if you have a business that's producing $250,000 a year that you can actually take out of your business, and it's a very defensible business that will last over time, that's really key, then you've essentially created, in my example, the equivalent of having $6 or $8 million in assets. And so the way I like to think about this is, again, I like bigger. Can you do both? Can you build a great asset that is really, really solid, will be durable, will last time, has backup plans in place, and get to a place where you're taking money out of the business, you're investing it in these other asset classes, and you're growing that other pile of cash? So you eventually get to this place where You, if you had to, if something happened to business, you could live on the 3 or 4%. Um, the other reason why I, I think they talk about a lot of times in is 3, taking 3 or 4% instead of just talking about living on whatever the money produces is because we're gonna continue to have inflation out into the future. So the higher the inflation prediction, the lower this percentage is. So like in a low inflation environment, then you could probably follow the 4% rule. In a higher inflation environment, you might need to be following the 3% rule, just a little more data. Um, and so that's why they talk about it that way versus if your portfolio is spending 7%, why you can't spend the full 7%.

Yeah, no, absolutely. Yeah. I think one of the videos you made at Five for Fifty, I think way back, was around if we could measure the value of our business like the stock market or even real estate, Like to your point, like the mark to market of, of like every day, you know, your Apple stock is worth $200, $180, $210, $205. It's easy to value that. Look at an account in your bank account, whether it be cash or stocks. I'm like, that is the value. And I think so often at times we can, it's easier to place that as the dollars and cents of our net worth versus when you're building a business, there is real value there. And especially if you're in growth mode, it's very hard sometimes to understand the asset value cuz it's, there isn't. Anyone every day, like, I would give you $1 million, I'd give you $1.1 million, I would give you $800,000. That's not happening every day. And because of that, we never attribute that to the value that we're building and the net worth that we as entrepreneurs are actually building up.

Yeah, I, I, I don't remember exactly what that video was, but I remember doing something like that. It, it's, um, actually I think it was a, there was a, I've probably done a couple versions, but there was a fairly recent one I did about that. And the title was something around me looking to hire somebody worth like that. I'd pay a million dollars.

Oh yes, that's what it was. Yeah, I'd pay a million dollars.

And I was trying to make this point, like, you don't understand all the work you're doing right now, even though you can't see what you said, even though you can't see the value, like, you are generating wealth right now. Like, every day you're beat down, keep that frame, keep going, keep building this thing, and one day, you know, it'll You'll see it, but it, it takes a little while.

I think sometimes the only time when I push back on that knowledge, like that mentality is there are some people who never actually make profit. They just stay in this perpetual growth mode of like, I am chasing the bigger thing. And then they never actually make it profitable or make it systematized to where there is value. 'Cause to your point, it has to have profit and it has to be sustainable long-term. Otherwise it is worth nothing. Nothing.

And that's a nuanced conversation because on top of that, a lot of people perpetually stay in that mode. And they say, I'm investing in my business. Like, yeah, no, no, you're just running a highly unprofitable business. It's, you're not investing in anything. Yeah. This is, yeah, it just, you, it's, it's just, it's priced wrong. Yeah. You've got all these other problems in the business. If you fixed them, it'd immediately be profitable. A lot of stuff you talk about.

Yeah. All right. We're gonna talk about engineering the business to sell. And we kind of glanced over a little bit of private equity stuff there, but when, if someone is thinking about selling down the road, what can they do to, to improve their multiple, be able to build it structurally, even from a legal perspective, to actually sell it, whether it be to private equity, a competitor, et cetera. You have a lot of experience in, in all these areas, specifically private equity on the software side. So what would you be giving advice to that person that is actually building to exit the business and not just live on it, more of a sustainable passive investment for the long term?

You probably need to clean up some stuff in your business. So, I would tell you first and foremost, there's a lot of things we can talk about here, but you need your accounting and your books to be very clean, very trustworthy. They're going to get audited and they're going to get compared to all your bank statements. The people buying are not dumb. They're very sophisticated. And so your stuff has to be legitimately clean. Also, you might want to tell the story of like, yeah, I know that my wife's car is in there, but we need to back that out, put that into my— like, there's all these things like, oh yeah, we take vacations out of the business, get all that junk out of the business years in advance of selling the business. And so many people do that. And you got to get that stuff out because there is no guarantee that you will get essentially credit for that back into your EBITDA. Your net profit, and that will cost you money. So clean that stuff up. Also, the more games you play like that, it just— like, we didn't do any of that at Service Autopilot. Like, again, we weren't ready to sell. We weren't planning to sell, and then we decided to do a deal. We didn't have— we didn't clean up anything. There was no time to clean anything up. Like, by the time we decided we were going to do the thing, fortunately, we didn't play any of those games. We had incredibly clean of books. And I would just tell you, if you're thinking about selling, just run the business that way. If you're never going to sell, do whatever you want to do. But if you're going to sell the business, that's imperative. That's where it starts. What will also happen is you're going to go through due diligence. And Mike Andes, I mean, there's so much I could say here. Please interject and add color to this or redirect me. But you're going to go through due diligence, and due diligence is painful. They're going to be simply because they're going to ask you a million questions. They're going to look at everything in your business. They're going to want to make sure everything's legit from your books to your contracts, to your payroll, to your federal tax, like everything that's ever been paid, to all your tax returns. They want to make sure you own your trademark. I mean, they want to know everything. And so there's just a lot of stuff like that. Are you— I mean, is everything dialed in? Do you know where you're— I mean, just down to the most basic stuff. And so if this is where you're going someday, then you want to be spending the money now on the right people, accountants, bookkeepers, a consultant, and just get it all cleaned and just up and run the business that way. Okay. So that's the basic stuff. Like, again, I mean, this— another thing came to mind. They'll probably never— I'll just keep going. So I'll eventually not give you everything that comes to mind, but like, What about pay employees versus contractors? Like, like, is all the contractor stuff done right? Like, where do they have risk? That's why I voiced that one. Like, what are their risks after they buy the company? And so they're going to be looking for all that stuff. So you want to clean that stuff up. Then the next way you could think about it is you want to think about it from their perspective. So what might— there will be a variety of potential buyers of differing types that value different things. So One buyer might be buying for cash flow. So they just want to buy cash flow, meaning they want to know you're going to produce a stream of income and that income is going to be highly durable, meaning it's going to last for a very long time out into the future. They can allocate money based on that belief and prediction of how long that cash flow is going to come in. But also, they want to look at this business and say, we can double, we can triple with just making some changes and doing some certain things, I could turn this cash flow into 3 times this. That's the story they want to be able to tell themselves. That could be one thing they're buying. Or another buyer might be buying— I don't know if it's a term used in the trades, but I think it is. It's what might be called a platform company. So I'll use my company as an example. You wouldn't be buying my company as a tack-on. I guess you could, but you'd have to be a massive company. And I probably wouldn't do that deal. I would want to be the platform. So I would, um, the platform company is the idea that we buy you and then we go and do lots of acquisitions around your company. So like maybe you buy a $25 million company and then I buy a bunch of $2 and $3 and $4 million companies and I roll them all into the bigger company. Or another way to think about the platform is we're buying, we'll use CityTurf again. I'm buying the CityTurf brand. I'm going to take City Turf to Austin, to Houston, to Oklahoma City. I'm going to, I'm going to start to spread out to the Southeast. I'm going to build a big giant regional business using the City Turf brand. It's a platform. So another person could value that. So they're going to think very differently about that, like that story. And so you want to kind of think about where, how big is my business? Why might it be bought? And what are they going to value? Generally, the things you can sort of bet on is they're going to value speed of growth and they're going to value profits. I mean, it's kind of that simple. And then how well put together is the business? Is it clean? Like I talked about, uh, is it in a strong market where we believe we can grow this business? Because if you're buying a business for the cash flow, but there's not a belief that there's a lot of opportunity in the market to grow it bigger. And we're just buying it for that cash flow that it is today, and we're going to pay a lesser amount. But if I can buy your business and I believe I can triple it, quadruple it, 7, 10x it, okay, that business is worth a lot more to me. Again, I'm just going to— I think this is valuable, so I'm going to throw— keep going for a bit here. There's other things. You may just flat out be lucky. You're in a great market in the United States. This company buying you has gaps in their region or their portfolio. Hey, you know what? We really need a presence in this area. We're all over this other place, and we want to own a premier company in this market, and we're willing to pay up for it because we need to own the bigger company to block out competition because this is a really important place to us and we don't have a presence here. That could be a scenario, and that's sort of like a getting lucky kind of scenario where there happens to be a buyer in the market that needs exactly what you have. And if you kind of get clued into that, it's like, hey, They'll pay up for that. And so there's a reason I tell you all these different scenarios is there's a lot of scenarios. But if I— and you can't predict what those scenarios are going to be. So what you do, in my opinion, run a super clean organization, build an organization that has— if it's bigger, if it's a bigger business, build a— that has redundancies in it where when you leave, this is imperative, when you leave, the business will be just fine because other people are actually running the business. I've given this example before when we sold Service Autopilot. I had— I didn't sell it all. I sold part of it. I had no earnout and I did have a non-compete, but we could have left day one. So we didn't have to stay in the business. They wanted us to. They would've been unhappy if we left, but contractually I didn't have to stay and there was no earnout. If you have a business that they're more concerned that the leadership team can't run the business, then you're more likely to be— we'll call it trapped in the business, meaning they're going to lock you up for years. You have to stay for 3 years. It has to hit these goals to get to earn out. And earn out means to earn what we've bought you for, $5 million or $10 million. You're going to earn out that $5 or $10 million based on hitting certain goals over a period of time. The better your business is put together, The better the, the team is, and it's not all on you, the better and more favorable the terms will be when you go to sell and the more money you'll get for that business. And so then you want to be able to show a growth story. Like one is we believe, and you can prove to them, there's a lot of potential to grow in this market and we're already proving it. We are growing. So companies are often highly valued on the profits and the speed of growth. So Mike talked about in the software world, this, this nice clean metric called the rule of 40, and he defined it the other day. But just to remind you, it's like you could either be a company growing at 40% top line with no profits. That's amazing. That's fast growth. Or you could be a company with 40% profits and no growth. That's a great cash flow story. Or maybe you're growing at 30% and you have profit. Like, I think Service Autopilot was growing at like 30, high 30%, and we were 55. So we were high 30% growth rate, and then whatever the profits were, that would make up the rest of the 55. While that's not a metric used in home service, you could think about it. It tells the story of how companies are valued. So they're going to want a story of growth and already showing profits even while you're growing. So I'll stop there, but there's a lot more, but those are some of the biggest items.

Yeah, I think that's why a lot of times too, when people build the business finally where it is clean, they have a team in place and it doesn't rely on them running every day. They're like, this is probably a better asset to hold and just let the cash flow keep coming in. It's growing.

It—

I don't need to be there. And, um, I think that owner dependency is probably the reason why so many businesses can't be sold. The one thing that I, I always laugh at is like the, the, uh, caveat to this story The, the example is like, that's different is Elon. Like if Elon got hit by a bus tomorrow, I don't know what would happen to Tesla stock. I agree. It's so built on around the founder.

Yeah.

But yet here we are about to deny IPO for a $2 trillion company that again, I believe if the founder got hit by a bus would probably go down by 50%.

Uh, yeah. I'm amazed at how little that feels considered in the market, in the valuation.

Incredible. Like it, it's, it's, it's, I always call it the biggest influencer-led company in the world. Like it's, it's the equivalent of Prime, you know, or, or any of these other influencer-led, like I look at Augusta as really influencer-led. Every lead comes from my content.

Yeah.

And so that would be a dependency in my mind. And then I also look at, then I look at Elon, I'm like, okay, he posts one thing and all of a sudden the stock goes up 20%. Like how in the world? So anyways, I, I've always been very interested by the fact that like we have key man risk, but also when we're there, what are we doing for the business? But when it comes to selling it, unless it's public market, it actually becomes a liability if you as the founder have to be there. I think a lot of times we always thrive off the adrenaline that comes with being needed. I always say like a lot of times, especially at that $2, $3 million marker when you need to start handing off delegating, kind of that Superman, like, I need to be felt like I need to feel needed. I'm used to people coming to me with problems, and that's the exact thing that keeps you from being sold because people come to you for problems. I agree.

I like that. You know, a lot of people have probably heard it.

It's—

I've heard it said frequently. It's like, just build a business that's really great. Just like build a really good business. And the attributes of a really good business are almost everything. They're everything we just talked about. And just build it. And you may find out, and when you own that type of business, you don't even care about selling the thing. And so if you're just building a super high-quality business, it will be worth money as it gets bigger.

I have a question. So when you, you sold the private equity, then you were there for a while as CEO, but there was a day you had to walk out of the doors.

Yeah.

I'm just wondering, like, I hear some people talk about it's like a big deal. Some people, it's Who cares? I got paid. Let's rock and roll. Let's move on to something else. They're excited about what's to come. What was it like for you? Because for me, I'll be honest, I can never imagine the day where I walk— like, I don't care how much money— I don't even know, like, my identity is so wrapped up in it. And I don't know if that's a good thing or a bad thing. But like, I can't even imagine the sense of like, oh, like Augusta is not— it's not part of me anymore.

Yeah.

What was it for you though?

It sucked. It was terrible.

Really?

Um, I dreaded it. I also was, uh, really concerned about even telling the team we sold. It was, uh, it was hard for me to even tell the team, but I, um, I had a little— I didn't feel so bad about telling the team that we sold because I was planning to stay for quite a while because of what we were going to build. I mean, I I guess I'll give a little background on, in answer to your question here. Maybe it'll be interesting to people, but the, the group we picked, because I had 27 formal offers, the group we picked is known to build stuff big and take it public. That's what they do. And so, um, that was what we were going to do, and I was really interested in doing that and seeing, having that experience in acquiring 9-figure companies and, and doing and building this thing to where John and I originally had planned. And we were going to staff up the dev team. We were going to do all even more. And we already had a pretty big dev team. And so I wasn't planning to leave. So while if I had been just selling the company, it was sort of like goodbye to the team. That would have been brutal. But when I was able to honestly stand in front of the whole company and tell them about the event, that happened and I didn't feel so concerned about it. So that was hard but not painful. But then telling everybody I was leaving officially, that was tough. I mean, Service Alpi was my baby and I loved the team we built. I really liked our members and John did too. I mean, we, we just really liked what we built. Like, it goes back to we didn't plan to sell it. So having to tell people that I, I think it actually turned out to be less hard around the identity part. Um, I would've thought it would've been harder, frankly, but I, I got to this place where I was like, man, I could do this again. I can do, I, I was getting to this place. I, I could be excited building another thing.

What it was, do you think, do you think at that point though, you were looking forward to getting outta there? Cuz now you didn't feel like you even had control for that, that year or two?

Yeah. When I, when I left, I was ready to go. I had been a little bit. Yeah, it's tough. Like, had we executed the plan that we were— we had planned on, I don't think it wouldn't have been the case. But because of everything that happened, and COVID kicked it all off, I wish I could run the parallel universe thing, and I want to see what would happen if COVID never happened. COVID was horrendous. I think it was the— it was the thing that screwed it all up, is my belief. And so, um, and it didn't need to be, but it was. So my point there is I had already been a little bit worn down. And so maybe that's why I was able to get comfortable and felt comfortable with— I could go do a new thing and I'd be excited about it. But even then, telling the members I was leaving and telling the team I was leaving, that was— that never got easier. The hard— almost the hardest thing was telling Academy I was shut— I was leaving Academy. That was really, really hard. And so, um, yeah, that was my experience. I, I don't know. I mean, how you go to battle with these people and they become I mean, they've done so much to help build the company. You like them, you care about their futures like you want. And I knew we had built something unique. I hear it all the time. Like, I wish we could go back to the old Service Autopilot days. I hear that all the time. Like, people wanted— we did so many cool things inside that business that don't get done in most businesses. And that stuff all went away over time. And so I You know, it's— that's the kind of painful part about it. But I will tell you, you should plan on that happening when you sell your company because the economy could go bad. It could be the best buyer and the economy could go bad. They could get in there. Something could happen inside the portfolio. Like there's a million little things that could happen that, um, they have to do whatever they have to do to protect their investment. And you just never know what's going to happen. The team in the private equity company could change, then that changes the strategy. Like, there's so many things that happen. So I just tell you, going into this, go into it eyes wide open. And I'd been advised— I knew going into it, I knew all this. I had been advised by so many people that this stuff can go really sideways. And so I knew it happens. I just thought maybe we, you know, that everything was going to go to plan. And it was until COVID. So just know that when you sell your company, you no longer own your baby and it may not work out like you want. And also, I'm sure this will come up again another day. When you leave money on the table, you may never see that money and they will tell you. Now, I saw my money, but they— so, but they might tell you that, yeah, you're going to get 3 or 5 extra money. The most common thing you're going to hear is like, yeah, you're going to have this liquidity event and your next liquidity event is going to be even bigger. We're gonna just blow this thing up. Maybe that does happen to some. Um, I wouldn't bank on it. And I would also know that whatever you're leaving on the table, you could lose it even with the best company. There's some—

and when you say, and when you say leaving the table, just for everyone listening, that is equity that you still own after the buyout or under the pretense that, hey, we're gonna keep growing this thing and whatever you have leftover is still gonna grow in the future.

Yeah. So let me put a number to it. So like, let's say you do a 60/40 deal and you sell your company for $10 million. Okay. So they valued you at $10 million. That means you're going to get a check for $6 million. There could be some other nuance. Like in our case, we negotiated, we got all the profits in our company, like all the cash in our company, which was millions of dollars. We had prepaid for Salesforce and HubSpot and all this other stuff is prepaid for a year. I clawed back everything that got prepaid. Like there are all these other ways that, you know, we got to pull money out of the company. So we left the company with no working capital. That was all negotiated into the deal. So not only did we get our number, we got all this other money. And, but, but all, that's a really important thing just to know that's even possible. Like, and so you do a 60/40 deal. Um, and there's all kinds of deals. You could do a minority deal where you sell less than 50% of the business. You could do a majority deal. You sell more than 50% of the business. Pretty common deals are 60, you sell 60, 70, or 80% of the business. Some people sell 90%. They generally don't want you to sell the whole company because they want you to have skin in the game. They want you to stick around and help if you need, like, they want you to have skin in the game. So let's just say you do a 60/40 deal. Your valuation was $10 million. You sell 6, you get $6 million put in your pocket, maybe some other money, maybe, and you leave $4 million in the business. So now the business is valued at hypothetically $10 million. If you grow that business into a $20 million company, Next time you sell it, you sell it for $20 million. Your 40% or $4 million is now worth $8 million. The very, very, very best deals want that $4 million to turn into about $12 million. That's the idea. And so that's where somebody might say, hey, you took $6 million off the table in the first transaction. In the next transaction, you're going to make even more money. And the example would be like, maybe you get $12 million out of the business the next time. It's a wonderful story. It's a wonderful prop. Promise. It's a, a wonderful thing to tell yourself. It's very exciting. It might happen. It absolutely happens, but it might not happen. You might get just your money back. You might get 1.5 times your money, meaning you left, uh, $4 million in, you get $6 million. You might get no money because depending on who you sell to, private equity gets their returns based on using a lot of debt. Mm-hmm. And things can go bad. And so, there's a million stories. And so, some people have never got the second part of their business, or they had earnouts and the business never got to those lofty goals. Or one more, I feel like I'm talking so much, hopefully this is okay. Or one more, it's like you got such an incredible valuation in the beginning. This is what I think most software companies that sold during COVID we sold so dang early. We left so much money on the table. Who knew what was going to happen to interest rates and government putting money in the market? But the reason I tell you that is a bunch of companies that sold later, like during COVID that didn't do transactions like us, where we took the cash off the table and they rolled stock, they might have rolled at these massive valuations. Then the software market came down, then software markets come down again now. They may never get another dollar out of their companies because they're when they go to sell them again, they may not even— they may sell them for the same amount they originally sold them for 6 years earlier. So that could happen in your case. Like, maybe you sell your company for $10 million. It was such a great deal for your business because somebody just wanted into your market. But then, for whatever reason, next time they go to sell the business, it's still only— even though it doubled in size, it's still only worth $10 million or $11 million in the market. You basically just get your money back. So I'm just trying to give you some ideas of how this thing works and expose it to you, but there's just a lot of factors in this. Um, did I leave anything out that you asked me that I didn't answer?

No, I think that was excellent. I think just knowing that that world exists for some people, they'll never experience it, but knowing how the structure operates, what these type of individuals that buy businesses are looking for. And I think a lot of us, if you're just looking at social media, you buy businesses by walking into an old person's business and say, hey, can you do seller financing when there's such another level? When you do have an actual asset that does run without you, it does have systems, it does have a leadership team in place. There's a whole nother level. And that's why I like to open up the audience, their mind to is like, it's not just, hey, I'm going to pass this along to my uncle or my friend that wants to start their business. There is another level. If you build a business that can run without you, that does have systems, that has longevity and quality of earnings.

And in home services, I mean, this, what I'm about to say can absolutely be challenged. The way I think about it is the really interesting level, and I don't want to use this to discourage anyone. The really interesting level starts at $3 million a year, $3 million a year in EBITDA, not gross revenue, profit. And so when you start getting past that number, now you're starting to really get into better and better multiples. Now, that doesn't mean you have to get to that number to sell your business for a number that will change the rest of your life. It absolutely— you don't have to get there, but there is levels to this. And the reason for that is the companies— like, I won't say anything else after this unless you ask me, Mike. This is kind of how it works, but I think this is worth knowing. So a guy starts out a private equity company, goes out, he raises $100 billion. So he's only got $100 million. And so, and there's a ton of deals in the market for him.

Or her.

And so they can be very careful about which deal they pick. They, it's only $100 million. So, um, they could buy 20 deals so they could buy $5 million deals, buying 20 of them. Like they could, they could physically do it. They've got the, they personally with a small team can actually go do these deals, close them. That fund does incredible. Like they return 3x to their investors. So next time they go out to raise money, everybody wants to be an investor in his private equity fund because it returned all this money. So now they raise $1 billion. So now they have $1 billion. They go back out to the same market to run the exact same playbook, but now they can't buy $5 million businesses anymore. Whatever $1 billion divided by $5 million is, I don't know that. I, yeah, it's a lot of companies. Like it's just too many. So now they gotta buy big deals. So now they need to be buying $20 million companies or above. And now there's a lot fewer of those companies. So what happens is, A lot of the very best funds with the best track records are big, and they're all competing for a small number of big companies. And that's one of the probably simplest arguments of why those companies are valued a lot more. They're also valued more because I would argue once you get past $10 million in annual revenue, you have most likely been forced to build layers of management inside your organization where you're less of a key person. And there's probably a flywheel in the business for sales and marketing, or you're getting close to it. Operations has been figured out. And so that company has momentum. And so it— once you get past $10 million, if you've done it right, those businesses are hard to stop. Like, they just kind of keep going over time. Maybe depending— they may go fast and they go slow, but they're probably going to keep going. Private equity knows that math, and that's another reason the bigger business is attractive to them. So those are just, again, some more behind the scenes stuff. But if you understand it and you're interested in this, that matters in knowing all this for the day you go to sell the business.

And, and for those listening too, like that's like the whole value in a rollup is if I can take 10 companies and combine all the revenue, well now it's not that I have 10 businesses that do $2 million a pop. Well, it's $20 million. Will that 10x the 10x my values? No, it could very well 20 or 30x it. Because now the size of that business is going to be attractive to a much larger pool of money, and the buyer is much more sophisticated. It's more competitive. And dude, what we were going to talk about, multiples— you could very well double your multiple simply by increasing revenue and bringing all that revenue together. And so this is like what, what even John was talking about with the, the, the previous plan for Service Auto Pro. I was like, let's roll all these these software companies together, and when they're 10 times the size, we might get a 20 times a, a different multiple altogether. And so sometimes the best thing to get a, a higher price is simply get a better buyer. And the bet— way to get a better buyer is build a bigger business.

Yeah.

That they are even interested in buying you.

That's exactly right.

Because many times we're just too small to actually even get a sophisticated buyer.

And I would— one little thing on the rollup thing. This is when sometimes I feel like, and I think I'm talking from an educated standpoint here, this is one of those areas where a company that's doing a lot of roll-ups can go great, but it's also what I think can give private equity a bad name. Yeah. So that's when you'll also hear this idea of financial engineering. So like, let me paint two pictures. If you're a $15 million company, a private equity company comes in, they buy you and, hey, we want to take your $15 organically, meaning naturally. By acquiring clients in-house, whatever, or just acquiring clients. We wanna grow your company from $15 million to $30 to $45. We're gonna do that. And maybe here and there we'll do a few little very strategic, careful acquisitions. That's a, can be a very thoughtful approach to building a company where you don't destroy the culture. Uh, you don't get your, the, maybe you don't put too much debt on the company cuz you did, you buy a $15 million company and then you go buy $100 million worth of other companies. And you put so much debt on this business to make all those acquisitions. That could be pulled off and it can go well, but companies can— private equity companies can also get themselves in a world of hurt. Like, those things can go bad. That's an example of how they go bad. But it can also go bad for you because that's where culture gets destroyed. That's where it could start feeling like the only thing that matters to anybody is just making the number, just hitting the growth goal to the detriment of everything else in the business.

That's—

so it could go either way. I think I blended two things. The model I am more attracted to is I would want to be purchased, and we do some very careful strategic purchases over periods of time as the company can onboard and absorb those companies that are being acquired. And if that's the strategy that's going to be employed when you're being bought and you want to stay in the company long-term, there's a high probability you might be able to stay there and be happy. If the strategy is we're going to buy you and we're going to buy 10, 20, whatever number of companies as fast as we can. We're just gonna merge them all together and we're gonna flip 'em to the next buyer. That's generally called financial engineering, and they're just playing a game that's called arbitrage, and they're sticking all these companies together. And maybe originally you were worth 5 times EBITDA, and now you're worth that 9 times or 10 times EBITDA by cramming all this stuff together. That's financial engineering. That sucks if you're living in the middle of it. Now, if you're an investor in it, you may be like, that's cool.

That's okay.

But if you're the guy running the business and your team is running that business, that is not a fun world to live in. And so that's something else to know.

This is the neighborly thing. Like, uh, they brought all these franchises together. Most of them were founder-led originally, and now they have a, you know, the kind of the portfolio of 20 different home service brands. But almost every single one of them, depending on their management individually, the brands have just said, it's just like, all it was because now they've been sold to KKR. Oh, so yeah.

Okay.

Yeah. And they really put it all together and then now it's been sold to KKR and it's just numbers, numbers, numbers. Like one of their, one of their team, their, their management has became an owner of Augusta. So I got all the inside baseball of like what happened the day that happened and like the entire leadership team leaving over the course of 12 months. And like, that's the part where I think to your point, everyone, it gets a bad name. Yeah.

Yeah, there's great private equity and there's lousy private equity. And it just, you know, so if you kind of understand the game that's being played, you can decide, um, it might give you a little information on which one might feel better for you and your team. But you might also say, I mean, you got to decide for yourself. You might say, I don't care. That one gives me the best value. I'm taking my money and I'm going to go whatever, go do something else. And you may not care.

Yeah, turn your phone off.

In the software world, there's, you know, there's, there's been a whole ton of private equity companies that's known, that's the game. And people are like, like Vista used to be a name where people are like, they have killer performance, but it's going to be painful. And so a guy buying a Vista or selling a Vista is like, yeah, I know what we're in for, but I just want the maximum number. And so that could be your offer. Like in Service Autopilot world, we took $10 million less to go with the group we went with because we thought the other would be more— it'd just be not as good for the team and for our clients or members. And so that's going to be a decision you might face someday if you have multiple buyers. And that's a few ways you think about it.

Yeah, I want to wrap up today with what was actually, I think, the first thing you ever put on our shared notes app for our docket. So for those listening, we have a notes app that we just share our ideas. This, I think this was the first one you ever put in there. So talk about the Mag Seven, what it's done in the past. Let's just call it 15 and 16 years. We have the graphic if they want to show it up on the screen of the valuations of some of the top companies back in 2010 versus today with the Mag Seven being Nvidia, Apple, Alphabet, Microsoft, Amazon, and then also like Tesla, Meta's in there, etc. So go ahead and give us your perspective on this. I know your argument is that the future is tech. This is where all the money's going. This is the future. Uh, so for all of the people that just sat through us talking about hundreds of millions of dollars going to private equity, let's talk about now the public markets and all these, uh, tech oligarchs making more money.

Money that can't even fathom. Um, yeah, so the Mag Seven is basically the seven biggest companies. And the simple story is, if you look at this graphic on the screen, in 2010, there were two technology companies on that list. If you look at it today, all but one is a technology company. And so the gist of my argument is this is a visual that proves my thesis that the future of your business is also technology. It's really easy for us to look at a graphic like this and say, well, this just applies to the big companies, or it just applies to the actual technology companies themselves. Who's like, where is the money coming from? That makes this possible for NVIDIA and Microsoft and Google to be the biggest companies. Take ChatGPT, or better said, Claude. Where's the money coming from? It's coming from business. It's coming from enterprise. And now, and that's who's spending all the money to make Claude or Anthropic as valuable as it is. And where's Claude going next, or Anthropic's going next? They're going to SMB space. They're building tools now for the small businesses. And again, all the money that's giving them these insane valuations is actually coming from business. That means people are using this technology. My argument is simply that when you see this data, it is proof positive that this is where it's going. I would ask you this question. I mean, looking at this data, well, let me make this statement. If in 2010, you and I had taken all of our money and solely invested it in purely technology, we would be far better off today than we would have been spending that money investing that money almost anywhere else. It has been the growth story of humanity. And I believe that, that story, that for you to not believe that this is going to continue to be the story, you have to believe that we're about to hit pause on the technology growth, or you have to believe that it's about to slow down. I actually think we are accelerating. And one of the things that I know, like, A lot of people, I might say, hey, parts of the economy are doing really good. And people will say, no, it's not. The economy's terrible. Everything's bad. You know, and I, and everything, the employment numbers are all, unemployment numbers are all fake. Like there's so many of those arguments out there and we can debate those types of things. And people will say the same thing about this, what I'm about to say. I actually think that In the last 4 years, something incredible has happened. Maybe it's 3 years. I don't know. It's something incredible has happened in the United States for all, and I'm 100% the guy in the camp. There's a lot of bad stuff going on and I'm very negative on how a lot of things are going and how the country's run. I'm, I'm, I, I'm probably with you on a lot of that stuff, but here is a story that I think is incredible historically. If you think about how a lot of the money has been made, people have gotten really rich building social media sites. They've gotten really rich investing, like financial investments, trading the market, the Goldman Sachs, the JP Morgans of the world. They've got really rich in oil and other things. And we've, we've been building things and doing things that like, they don't, in my opinion, add tremendous value to the world. Like, Goldman Sachs making more money doesn't necessarily make the world a better place, just as Facebook doing social media doesn't necessarily— I think kind of proof positive, generally hasn't made our world better. But now if you look at what's happening, people are building AI. I know there's an argument it may not be better. They're building robotics. We're investing in life sciences. We are investing in things that are material, like maybe eventually robots. And I understand you can argue the story like, hey, it might displace my job. But if you think about where we're investing, we are now investing in things around healthcare, um, technologies, tons of things that will actually have a chance of making our lives better. I think that's an incredibly exciting story for the country. Like, we're actually doing, in my mind, productive things. And guys, fewer, fewer people— I say guys as a general term— are more and more people are now getting excited about this. And instead of coming out of college and going to JP Morgan and Goldman, they're coming out of colleges and they're going into biology and life sciences. They're going into space. They're going into all these other things that legitimately will change the world. So if you were to think about where money gets focused, what is the outcome a decade later? So I came up as a young person in the '90s. Money, like, was lost and— but very, very focused on the internet. 10 and 20 years later, it is trans— our lives are for sure better, in my opinion, because of the internet. And that money that was focused there led to great breakthroughs. And a lot of times when the incredible brainpower of humanity is focused on problems at the same time, and a lot of money comes in to solve that problem, big breakthroughs happen some number of years, years after. So, If you're an investing person, if you think about investing, and I do, and you think about trends, like where do you want to be in business? What markets do you want to be in? What waves do you want to ride? What trends do you want to ride? You want to think about what's been happening in the last few years, what's happening right now, because there's something coming on the other side. And what's happening is one of the most— I think the most exciting thing in my lifetime. We are actually investing massive amounts of money and massive amounts of the smartest people in the world on some of these problems that will have, in my opinion, massive transformation on humanity. I don't know how you look at that story and what's happening right now and what will probably come and say, this whole entire chart is not going to be— it's going to be orange. There's only one— this person's gone at some point, and it's going to remain all tech moving forward, and tech is going to dominate more and more of the S&P 500. It's going to dominate more and more of our lives. Like, I believe with certainty AI is going to get vastly better. I believe with certainty AI robotics is coming. I believe with certainty we're going to have incredible breakthroughs in longevity and health. I don't know when, but it's coming, probably on a slower timeline. And so I, I say all of this for a couple reasons. A very basic one is there's a lot to be negative about, and if you only think about the negative, you will never build anything interesting. But if you believe this narrative, then you have a chance of being optimistic. And all the optimists have won in life, in my opinion. Like, they're the ones that have built everything, right? That's a little exaggerated, but generally that's who wins. And it also, it's all about keeping your energy up. So I want to tell you this to say there are good things happening and reasons to be optimistic. And then, but the broader point, what started this whole thing was, if this is happening and you buy into my thesis that's going to continue to happen, then why would your business be immune to it? And it's my argument that the future of your business is one where for a long time it just means you use more technology in your business to run it automate it, do things for you where your— the team you have today is more capable, faster moving, can get more done. There's a million things inside our businesses that we do not do that we could do so much better. And we're going to now be able to do those things. This isn't a story of firing all your people, in my opinion. It's a story of doing the 90 things you know you're not doing right, could do better, could do faster. You're just going to do more. And the way you're gonna do it is you're gonna do it technology. And so technology's gonna become a bigger part of your business. So why does this matter? If you don't believe this, then you're not gonna adopt technology. And if you don't like technology and you fight it, you're gonna get crushed. I believe that. And so I would encourage anyone watching this to get comfortable, whatever that takes, with this idea that you live in a world of having more and more technology in your business. And like anything, if you don't like bookkeeping, you don't have to do it. Like, if you outsource your bookkeeping because you hate it, well, you can do much of that with your technology. I actually think most people should outsource their technology, and that will come still in the form of buying tools from companies. And it might also come in the form of hiring technical people, the equivalent of the IT person, to help them inside their company. But if you fight this, even as a smaller company, you're just not going to be as efficient. You're going to make less profits. Your life's going to be harder than it's going to need to be, and you're not going to get found like that. We could have 2 hours on why you just flat out will never get found and people won't buy from you. And so I wanted to give a visual to this to say, this is where the world has gone over the last 16 years. And I don't know how you could possibly convince me that this isn't where the world's going at an even faster pace over the next 16 years. So it informs what we need to be doing.

Yeah, 100%. It's been so interesting the past few months as it's really started to accelerate, just gauging even inside of Augusta when we have, you know, a couple hundred people, everyone's different ideology of this has been very difficult to actually, for me to navigate what is our stance as a brand? How fast are we adopting the AI in our images, in our video, on our website, how we collect information on the forms. How we use in communication, cuz everyone is so different at what, how, what you're saying is like, how fast do I wanna adopt this in my own business? And because AI, Aunt Sally, Uncle Bob, they just lost their jobs and it was tacked on as AI, which is a lie.

Just, yep. Agree.

COVID bloat. But like, because it was tacked on as that, because that's now a very like pro thing to do for your valuation in the public market. But now that AI made them lose their job, now I'm gonna use AI in my business. I'm going against Uncle Sam and— or not Uncle Sam, Uncle Bob, whatever his name was, Aunt Sally who lost their jobs. And so it's been really a very much of a balancing act because for myself, who's very much absorbed in it, very involved in trying to like use the tools, adopt it on the software side. But then it's like there's a lot of elements when it comes to home services. I feel like there's a resistance. And as much as I want to say the words that you just said, which is like, you will be crushed. I have to be very careful to say, like, I also see the, their, the emotions wrapped up with all these other labels that have been attached to the technology. And so that's been like a, a thing that I've been navigating, I guess you could say.

Yeah. I try not to be too dramatic about anything, and maybe you will be crushed is a little dramatic. Maybe that's a little strong, but I think I worded it that way because I do really worry for people. That are just anti-technology because you're not going to be competitive at a margin standpoint. I mean, I, so my general belief, what's going to happen is that there's a lot of things I theorize, but one, one of them I believe is going to happen is that margins are going to get better. So we're going to become more profitable. But I also believe that in time those profits are going to be competed away. So I think we're going to have a moment of time where the businesses get more and more profitable, and then over time they're going to kind of settle back down to where they're at today or something like that. And so for you to even have a chance of maintaining the profit margins you have today, you're going to need to be using these tools, like especially if you're a small person. If you could have one person in the office in a small business and yet you have 2, and that extra person's $60,000, $65,000, and you're running an $800,000 business, that's meaningful. That's a big hit to profit margins. And like, that's an example where it might be in the future you just needed the one person and without— with technology, and you could— you could— and you've got 2 people, whereas everybody else has one. That could be your risk. That's why I say there is this risk of getting crushed if you don't use and utilize these tools. But I also hinted at this idea, and I don't know exactly how this is gonna play out. It's also gonna impact you on just getting the business in the first place. And we don't know where it's going, but if you're not using technology to be one of the fastest people to respond, to answer the phone after hours, on weekends, to turn estimates fast, to follow up on it, all the basics, like just if you just, if you're not doing the basics faster and faster because your competitors are, you're just gonna lose more and more work. You're gonna be, uh, relegated to just referral-based work, and that's a really slow way to grow the business. So those are the types of things I mean when I say getting crushed. And I, the other, sorry, go ahead, Mike.

Oh, I was just gonna say like, even, even the, the leadership on the, like, whether it be Anthropic or ChatGPT or even the government, I think part of it is like the labeling of AI is such as this bad thing in a way to like, to even how you say like you're gonna crush. I, I, I feel like I need to say that sometimes because the fear is what drives behavior. Yeah. But also like the optimism that can come from this versus like every other technological revolution, we have been better off afterwards and we have found more meaningful work to do afterwards.

Yeah.

And so like it is, uh, it's almost a shame that it is negative because what I feel is gonna happen is the people that do adopt it The people who already have the money in home services that already have a big business, they will just continue to take more market share. They will become more profitable. And then the small guy that's like, I'm not, they're the ones that are gonna suffer. And so, uh, to your point, the, the person that is small, they have to adopt these tools to stay competitive, in my opinion.

Yeah. You, you said the, what I was about to say. I agree with you with, um, an asterisk. So I feel like what's going to happen is we are going to— it's going to play out. My theory is that it's going to play out like it has in the past. We're just going to— new careers are going to be invented. It's everything you just said. New jobs will be created, all of that. The asterisk is depending on how fast this happens. That's the risk that I don't know how you quantify it.

If—

because the AI stuff does seem to be moving really, really fast. And so if it, if it happens, if it just keeps truly accelerating on a straight up curve and we get robotics incredibly fast, that's where so much disruption might happen. We could be in trouble. But what we don't know is, will AI really legitimately go straight up like everybody's saying it is? I mean, at the end of the day, it's a prediction machine. It's not actually a brain. Like, people don't under— it's just a prediction machine. It's a smart calculator, as some people say it. And it's not like when somebody, I mean, there's this story of, I was listening to a thing with Marc Andreessen the other day, and he was given an example of, and it's so true. And he just articulated in a way that's like, okay, that's a good way to explain it. You hear these stories about how the AI tried to protect itself and to keep itself from getting turned off.

Yeah.

And so, okay. He's like, and he basically told the story. It's like, there was no intelligence there. It was the prompting. It was the training data that had been built in. It had training. I'm probably getting it slightly wrong, but they'll at least make the point. The training, it had been trained on data on how to protect yourself. Like, as an example, it might have been trained on sci-fi movies where the AI was going to get turned off. And so, that was its context. So, all it does is read a bunch of words. Make predictions. And so it, that was, and so it followed that training data and says like, so it's gonna keep itself from getting turned off. It's about how we train it, the data we give it, and then it's about the prompt we give it. It's dumb. It's really, really dumb. So the reason I tell you that is where we stand today to get to maybe what some people are predicting. There's a lot of debate if we can really go from a prediction machine as we have today to make this leap to like this real incredible intelligence that is able to come up with novel and new ideas without even looking like piecing to— what it's doing today is it's like maybe putting together combinations, but to come up with something completely new and novel, can that be done with the tech we have today? People don't know that answer. So there's a lot that's like, if you listen to the news, you might think we're already there. It's, it's, we're not. There's a lot of breakthroughs that have to happen to get us to where Elon and so many other people are predicting. And they're predicting based on just the, you know, like power laws and the, the ex— the charts say, well, if we're moving at this pace, we're probably gonna be here by this amount of time. You're like, you're predicting where we might be end up. We don't know where the technology might run into a bottleneck and be slowed down for years. And so those, because I believe we are gonna most likely, cuz we usually do have these bottlenecks and these periods of slowdown, things are still advancing, but not as fast. That's where I, I'm a little optimistic that people are gonna have a little more time to adopt and learn new skills and go into new jobs. That's, that's why I told you all that. I, I was like, that's my general theory what's gonna happen, but we don't know.

Yeah, 100%. All right. Well, let's wrap up. Uh, I wanna end it out the way that we do the C-Suite Unfiltered, which is, uh, non-financial advice. So, oh, in case anyone is new, non-financial advice can be financial advice, but it can also be non-financial advice. So, um, I'll, I'll come up with one. You try to think about one while I talk here.

Okay.

Because I know I sprung this on you. So my non-financial advice is if you are doing instant quotes on your website or over-the-phone estimates or any sort of automated way of getting an estimate sold, call the customer once they are on the schedule and offer them another service. We're doing this right now at CommandStorm. We just made this. It's just a very simple thing, especially if they have not had a human connection. Call the customer, say, hey, just confirming that schedule. I just emailed, I just texted you. I want to offer you another thing. Uh, we have seen a huge adoption of a secondary service when we actually get a human on the phone. Uh, and so that would be my non-financial advice for the day.

Smart. Okay. So I didn't know this was coming. I hadn't, uh, I would, I'm going to go with something. I'm going to do a Five for 50 video on at some point here. And I just so believe this, like it's, it's basically this idea that At the end of the day, the most important thing for your business to be really successful, for you to be optimistic, for you to keep your foot on the gas, for the thing to keep growing, it's about you and how healthy you feel and how healthy you are. And it's like this, like you are the key to this whole thing. And so I would just ask you, how are you eating? How are you sleeping? And how are you exercising? I don't even need to tell you what to do. We all know. And every time I go on a vacation and I let any sugar— I'm just going to say this so you can think about it in your life— sugar, I have a drink, I eat whatever. For me, even a lot of carbs. Anytime I let that in my life, I— why do I not feel like I have that much energy? I can just tell that I'm not working as fast. As soon as I come home and I clean it up and my diet is like meat and vegetables, and everybody's different. I was like, I have so much energy. I'm so optimistic. I'm ready to go for everything. So think about having that in your life. And like, if you're not doing that, then how are you gonna get the thing you want? How are you gonna show up as the very best, most optimistic person to lead your company?

That's what we need to do for all the AI doomers. They need to eat meat and vegetables. They'll become more optimistic.

Yeah.

The world will be a good, a good place tomorrow.

Yeah.

So fantastic. Thank you all for watching from the Sultan of Service and the Pharaoh of Franchising. We'll see you next week.

Good seeing you. See you next week.