The Koerner Office - Business Ideas and Deep Dives with Chris Koerner - B2B Stump Grinding. Cash Cow or Dud? HoldCo Bros Discuss. Ep. #037

Episode Date: July 10, 2024

Is B2B stump grinding the next big move? HoldCo bros break down all the numbers. With Nikonomics host, Nik Hulewsky---Watch this on YouTube instead here: https://www.youtube.com/@thekoerneroffice?sub_confirmation=1Ask me a question on or off the show here: https://tkopod.co/p-askLearn more about me: http://chrisjkoerner.comLearn about my company: http://cofounders.comFollow me on Twitter here: https://twitter.com/mhp_guyFree weekly business ideas newsletter: https://newsletter.chrisjkoerner.com/Nik’s channel: https://tinyurl.com/nikonomicsYT--01:10 Exploring the Tree Trimming Business Model02:07 Challenges and Opportunities in Stump Grinding06:09 Market Research and Initial Testing10:34 Financial Projections and Business Strategy13:25 Potential Marketing and Agency Model17:48 Testing and Cold Calling Strategy19:13 Exploring Market Needs and Strategies20:07 The Importance of Statistical Significance23:29 Case Study: Laundromat Business Success27:14 Identifying Business Opportunities30:16 Competitive Analysis for Business Expansion32:47 Leveraging Data for Strategic Growth39:54 Collaborating with Commercial Real Estate

So let's call it just to be clean and conservative 3,000 businesses in DFW that may need to grind a stump for their customer, their homeowner customer at some point. Okay. Okay. Yesterday I actually ran tests for this. I texted 200 tree business owners. And this is exactly what I texted them. I will read it verbatim. Happy July and welcome to the corner office.

Today is an episode of Holdco Bros where me and my business partner slash best friend, Nick Uleski. we riff on business ideas. And today we talked about stump grinding and validating home service business ideas. And coincidentally, if you go to my YouTube channel, just search the Kerner Office on YouTube. I did a live stream of this that lasted an hour and a half. And I walked you through every single step of validating a home service business idea, wherever you may be in the country. And it was super interesting.

And we did it for dumpster rental. There's no sales pictures, no ads. Go watch it. The Kerner Office on YouTube. Meanwhile, listen about stump grinding and why I think B2B stump grinding is an incredible opportunity and one that we're actually testing and trying right now in public. So please like and subscribe and share with your friends because I want other people to hear this. And thank you very much. For those who don't know, we own a tree terming business. It's pretty small. And our whole

model is we don't do any actual work. We outsource everything. We own a truck. We have an operating partner. That's it. We don't have a warehouse. We don't have overhead. We don't have employees. We don't have a chainsaw. We have a truck. We have James. Right. Yeah. And it was purposeful, just like for people who are listening. Because in order for us to get into the tree trimming game, we would have had to expend a lot of capital in buying a truck and equipment. Or we could generate the leads and sub out the work until we got to a place that we were big enough to bring that in-house. And then we can see our margins go up.

But anyways, yes. Yeah, because like our therapists and wives and friends and family and mentors frequently tell us, we're not, quote, good operators. Right? Whatever that means. Our therapist. Whatever that means. We're not, quote, good at the game of business.

You know what I mean? Yeah. Yeah. We're, quote, failures. That's what Patrick says. Anyway, so this idea flies in the face of our whole thesis, which is operationally light, marketing heavy. Okay. Okay.

But here's what I love. Okay. So Aaron Harper, CEO of Rolling Suds, he built a franchise called Patch Boys, Patch Brothers, where all they did, all they did was drywall pads. That's it. Okay. And it's a great business. It's high margin.

It's like a $400 minimum for a half day's work or $800 for a full day's work. And it's brilliant because you show up. You've got one hole in the wall. But everyone has stuff like other smaller things. And it's like, listen, you're going to pay me 400 bucks no matter what. Might as well knock out a few more things. And it's just very niche, very targeted. And so I don't remember if you told me this or not.

But I think the whole model is B2B referrals, right? Handyman refers. drywall work. Contractors referral. They're not really going directly to consumers that much. They don't avoid it, but they're just getting a ton of referrals. Right. Yeah. And so if we were to do the tree business completely differently based on what James and I have learned so far, it's really hard to find stump grinding because most of our subs don't own a stump grinder. But guess what? If you remove a tree, you've got to get the stump out of there. And it costs money. And so what our subs normally do is they'll go to United or one of the big rental places. And this is literally how it is.

You drive there, you wait in line, you sign a form, and then you go out in the lot and they load up this big heavy stump grinder into your truck or into your trailer. And then you take it back to the job site. It could be 30, 45 minutes away. You grind the tree, which takes 30 minutes. You load it back up and you drive it back to the rental place. Now, the rental place might be out of stock and you waste time. Or they might be too expensive. You got to price it out. Like, it's very inefficient, and it's not, it's like a loss leader. No one really makes money on stump grinding unless they have a dedicated stump grinding business. And so, landscapers needs stump grinders, hardscapers, tree businesses, like mostly tree businesses use stump grinders, but anything landscape needs a stump grinder at some point.

Let me ask you this. I get the premise, right? Like, a homeowner has their tree trimmed or tree removed. They've got the stump. And then they say what every spouse of an. amputee says like, I can't look at that stump anymore. And that was bad. That was bad. Anyways, what are they doing right now with it? What do they do with the stump? Do they call another sub? Like when we go and remove a tree, hold on, when we go and remove a tree and we leave, what does the

homeowner do after we leave? Like, how do they get rid of the stump? Sometimes the stump stays, but usually we bake that into our quote. Oh, we do. What James will do is he'll say, He'll quote it. Let's say he knows the removal is going to cost us $500. And then he knows the stump removal is going to cost us $200. So he'll go in there and quote $1,400 and say, listen, it's going to be $1,400 remove the tree. You still need to get the stump removed. If you close today, we're just going to roll that in for free. So he quotes it like it's free, but he bakes it into the price.

And then we just work it into the quote, and it's just a break-even loss leader. How much are stump grinders? to buy from $4,000 to $150,000. $150,000? Yeah. Okay, let's say we bought one. Like, where are we looking at? 40 to 60.

40 to 60. And then you need to buy a $5,000 to $10,000 trailer and a truck to pull it, of course. Okay, so we're looking at $75,000. Uh-huh. That's actually like exactly what I got to. Okay. Okay. Now, hear me out.

Let's say we test this concept. because that's what we do. We test things. We don't go all in on anything until we've tested it. Yeah, right? We test these. I'm still testing my marriage. It's been 16 years.

We're going to see if this works. Spoiler alert, it did not. We've done the scraping. We know the research. We know that in DFW population 9 million people, there are right around 1,000 tree trimming businesses. And there's around 2 to 3,000 landscaping businesses. And that includes crews that just cut grass.

Okay. So let's go. call it just to be clean and conservative, 3,000 businesses in DFW that may need to grind a stump for their customer, their homeowner customer at some point. Okay. Okay. Yesterday, I actually ran tests for this. I texted 200 tree business owners. And this is exactly what I texted them. I will read it verbatim. I said, and this wasn't really strategic. I didn't have a lot of time. And so I didn't do the most strategic thing. I did the time saving thing. The most strategic thing would have texted with my first text simply would have been, hey, do you do stump grinding? And then I would have got about a 40 to 6%

response rate. But then I would have had to respond again with the pitch. Instead of that, I just went straight with the pitch. I said, hey, man, I kind of keep it informal. Do you own your own stump grinder or do you rent slash sub it out? I only do stump grinding for tree businesses here at DFW. Any need for reliable subs. So I'm trying to qualify here. I want to know, because a lot of tree businesses own a stump grinder and they don't need to sub it out. A lot of them rent it. A lot of them just don't do it. And so I wasn't super enthused by the response. More people owned a stump grinder than I thought. And then some people rent it out. And some people, you know, three or four people were like, yeah, I need good subs. I know that people need good subs because we've been at this for a year and

we still need good subs. That is always, there will always be a need for business owners to need good subs. And so it was pretty decent, not as good as I thought, but I'm also toxicly optimistic. And so no surprise there. But here's the thinking. I've crunched the numbers on this. James said your average stump, which is about 18 inches, pause your jokes, it costs about $350.

Okay. Now, if there's two stumps there, you might be looking at 500 because you're already there. you already made the trip. It's a lot cheaper once you go two plus. Okay. Okay. If it's like one 24 inch stump, then you're looking at 450. And you can set up a pricing system to where like you add $10 per inch, right? Please hold your jokes. So I'm not going to say. I just lost. I just lost my train of thought. So it's like either I can lose my train of thought telling you to not make a joke or I can lose my train of thought when you make a joke. Either way I'm, I lose. You can do different pricing models depending on a per inch basis. You can standardize it.

standardize it. Okay. And then you've got like, do you remove the chips or do you leave them there? That's an extra price. Or you take a step further. Do you remove the chips and fill in the hole with soil? Do you know how stump grinding works, first of all? Do you know anything about this? I've seen it done and I know how the machine works and how they come in the back. That's enough. That's enough. Well, I don't know what you're specifically asking me. Like what it looks like to grind a stump. Yes. What the machine, how the machine works. Yes. Okay. It's like a big chainsaw. Yeah. And then it's got a couple of ways on it. You're going like, it's like you're cutting the lawn, right? But you're going back and forth and back and forth. You're going left to right. Right. Yeah. You're like swiping it slowly until it's gone. And then you have to go like six inches below the surface of the earth. Yeah. We had a big tree in our backyard removed and they ground half the stump. And then the rest of the stump was just sitting in there. So we'd actually have them come back out. And anyways, it was a whole big issue. But yeah, it's you have. have to do it right. Otherwise, it screws the lawn up too. Yeah, and there's other ways to do it. Like, you can get a big excavator and you can literally just scoop out this dump. But that leaves like a gaping hole that you rip out all the roots. And that's the most efficient when you're clearing land because you can just do pop, pop, pop, you can just pull them all out and then smooth it. But 80, 90% of the time in a yard, even if there's 10 stumps, it makes the most sense to grind it. Okay. And so anyway, I texted 200 people. I only got a 15% response rate, which is really low.

But once again, I went hard with the pitch from the get-go. And a few people were like, yeah, I'll let you know. I'll call you. Whereas those, like, if you follow up with those on a regular basis, they actually will. Because it's inefficient to go rent a machine on a lost leader. Right? It's just, it doesn't make sense. And so here's the thinking.

You take 3,000 businesses in DFW. Now, I know this is like number porn and it all looks good. If we could just get 1%. Exactly. Just hear me out. Hear me out. I asked James, how many stumps do we grind a month? So this is real data.

So it's eight to 10. Okay. Let's say the average. Let's say landscapers do less. Tree trimming companies do more. Let's say it's six. Six per month per company. We get 5% of the DFW market.

We do exactly what I did with LCD cycle. And that's take a database and hit every single person on that database in a CRM, notes by every single one. So like it's tunnel vision. All you know, all you see are these 3,000 names. And you're just working it. That's it. Very specific.

Yeah. You get 5% of the market to refer to you six to eight jobs per month. Let's say it's 350 per job, right? Which is the bare minimum? Some jobs will be 1,000. Some will be, it might be 250. Conservative is 350. 5% of the market is 150 companies.

We're not going to consumers at all. We're just getting referrals from current businesses. Each of them do seven stumps per month at 350 each. That's 360 grand, 367 grand per month in revenue or 4.4 million per year. That would be 40 jobs per working day. Conservatively, five jobs per day, which that's very conservative because even a huge stump takes like 20 minutes to grind. And if you're doing 40 a day, then you can really make efficient routes where they're all pretty close. Yeah, I mean, it just depends on. Yeah. Agreed. Yeah. So five jobs

per day. It's a one man crew, one man, one truck, one grinder. one trailer. Okay, that would be eight crews of one person each and then one manager. So nine people. Let's say you pay them 100 grand each, which is very generous. Maybe you're paying the manager 200. You're paying everyone else 80. You do commission, upsells, yada, yada, yada, yada. You're looking at $1.2 million a year in labor. That's including like payroll costs and all that. Gas. I crunch the numbers on gas. This is pretty accurate. 200 grand a year. I don't know exactly what repairs would be. So I just said 200 grand a year on that. Let's say insurance.

You've got to have kind of central storage unit, something to place backup equipment, in case something breaks down. Another 200 grand. So you're looking at $1.8 million per year in costs, which would be $2.6 million a year in profit at 5% of the market. Only DFW, only stump grinding, only B2B, no consumer stuff, one stump per job. So that would be profit. But obviously in the first year, you'd have to spend.

And you said eight crews? Yep, eight crews. But you work up to that, right? I'm just saying $600,000 just buying the stump grinders themselves. So there'd be some big cap X. Here's my question for you. This is kind of a curveball. I've started thinking about things this way as we talk about businesses because there are

tons of opportunities, but you and I are trying to get out of operationally heavy businesses. Is there a way where we could turn this into a marketing business, where we could turn this into a marketing business where we go to existing companies and say, hey, would you like to add an additional X dollars of revenue to your business? Pay us. We'll show you the business plan. We'll do the marketing for you. Only thing you have to do on your end is spend $75,000 to buy the stump grinder. And then obviously we'd have to share in some of the profits of revenue or we're just strictly an agency. But then the capital investment would not necessarily be on us, but it would be on the company that's already operating. They already have access to crews. They already know

the area, they have some name recognition. And then we could just be the agency that helps them grow through that marketing channel. What would you think of doing that? That could work. And you don't need to convince someone to buy a grinder either. There are people that do this, like only grinding, right? That is a thing. We would just need to be their lead generation source. Right. You know? So like potentially less upside, potentially less profit of ownership, but significantly less risk, significantly less capital expenditures up front. And like a lot more scalable. Yep.

Yep. And another thing you could do, which is like meat in the middle of what we both just said, is you can rent these $50,000 sum grinders for $3,000 a month. And so you can queue up the pipeline and then just test it out for a month. We could have James do it. James could be the guy. He could be grinding. He could be doing all that.

himself for a month. We could say, we could say, like, ignore all this tree stuff for a month. We're going to turn off our marketing channels. Let's test this. Let's do this. Because he's told me, like, this is a pain point. Like, this is, stump grinding is a pain point. There is a market for this. It's not like we're like hypothetically thinking this up. Like, we're in the business, you know? Here would be my question. If it's a pain point, why is nobody doing this yet? Like, why hasn't it been done? Why wasn't anyone franchising, you know, drywall patching? Like, You know when we're looking at businesses to invest in, that's like your number one question, right? If somebody's coming to you and they're like, hey, we just got to do this and there's no competitors in the market.

Like, you're the first one to be like, okay, so why is nobody doing it? In your opinion, like, why do you think nobody's doing it? And that could be the answer. It's like, oh, well, nobody's thought of it yet. Well, people are doing it. It's just not saturated enough. Like, there are stump grinding businesses. I think most stump grinding businesses, and it's a perfect business for a firefighter.

I knew a police sergeant that did this on the side because he had free time. And it's a perfect business for that, which is very similar to the tree business. But they're not thinking of it being a B to be business. That's the whole angle. They're going to consumers posting on Facebook marketplace. Right. And here's another thing that's a genius about this. Okay.

With both this business and the tree business, you cannot quote virtually. You just can't. The close rate isn't high. The tree's a lot bigger in person. Right. Even if you FaceTime them. Yeah, you have to. I've been reading forums for stump grinding because I was thinking,

stump grinding is a little different because it's more binary. Like you could say, get your tape measure. Tell me how thick it is. I'm more of a non-binary guy. But yeah. Okay. People are saying you still have to go quote in person, but here's the genius about this. We don't have to because we already have a tree guy there on site.

He just needs to know our pricing structure. He needs to pull up the tape measure or just send us a pitcher and we can use an app to judge how. Right. You know what I'm saying? Like he closes the deal. He's our salesperson. And then he knows exactly what we're going to charge. He works that in his quote. We don't ever have to go look at it. We just show up and do the job and leave. So it's half as much logistical work, half as much driving. Yeah. And that's why I like the idea of letting someone else do the execution piece of it. Like, okay, cool, this is how you price. These are the leads that are coming in. You handle the stump grinder. You handle the quoting. You handle the actual execution of the job. It could be a really good agency play as well. Yeah, I just, I like this because it's even more of a binary outcome business than trees, you know, like you just get the stump out. Oh, okay. It's just, it's very, you do it or you don't.

Whereas like house painting or roofing, it's like there's a lot of different tiki, tacky ways you can screw up. I want to tell you how we could test this even further than my quick 30 minute texting test. Okay. James helped me formulate this idea. So I was thinking a lot of these business owners, and you can see on the spreadsheet, when I scrape them are Hispanic, right? Their last name ends with as or S, right? I was texting James, and you can find very cheap cold callers in Latin American countries

like Mexico. Well, that would be good. And I was like, James, we could scrape out all of the Hispanic-sounding business owners and cold call them with a VA from Upwork in Spanish. Okay. How well would that sell? Yes, it can. Okay.

And then James said something, and he didn't really mean this, but I was like, wait, are you saying that we should use an Hispanic cold collar to cold call everyone? He's like, well, not really, but that could be good. And I'm like, that could definitely be good. We could even give, we could find a cold collar, have them test for 30 days. They're rock star. We love them. Hear me out.

Hear me out. We give them a percentage of the business, like literally 1%. And we pay him a fair market rate, right? And so when he calls, whether he calls someone, if he calls someone that's Hispanic, he speaks in Spanish. If he calls him this white, he speaks in English. And his pitch is like, hey, I. I'm a co-owner of this company, and this is our pitch and yada, yada, yada.

And I just feel like if he were to be selling to Americans, it's a stronger pitch because the assumption is that he's Hispanic. He's not going to charge that much. His price is good. And if he calls Hispanics, it's even better, right? Right. I think it's a great idea. I think you're going to what the market need is and addressing it.

I think it's smart. Yeah. So I want to take a list of a hundred people. Like, let's say 50 landscapers, 50 tree businesses. find a VA, tell him what the plan is, and say, I, or maybe even 200 people, because I want him to get 100 on the phone, pay him 500 bucks or something, and say, take very tedious notes. And I want to know exactly what does the market say, is this there or is this not? And then once you get a verbal, yeah, you know what?

I sub this out already. So I'll give you a shot. Or yeah, you know what? I already rent these. I don't want to rent them anymore. I'll give you a shot. Then we can do exactly what we do with our realtors, with our techs outbound. marketing campaigns, and we could just follow up with them every single week, automated, fully

automated. Like, hey, man, any stump jobs for me? You know what's interesting? And it's a tangent, but hang with me for a second. We went to Utah two weeks ago and the people that we stayed with Bryce, he works at Qualtricks. And his job at Qualtricks is, I don't remember exactly what it is like data integrity or something. He manages the relationship, but there are a lot of companies that pay Qualtricks for market research. And so I was asking him, I'm like, well, okay, you have a pool of people they're trying to test the market. How many people do you need in order for it to be statistically significant?

And he was like, 387 is the number. What? Yeah, it's like oddly, it's oddly specific. That's like, that makes you believe him so much more. If you were to say about 400, you're like, okay, whatever, dude. I know, I know, right? He's like, I tell people 400, but it's 387. I'm like, okay, walk me through that.

He's like, okay, for every like 10 people that you add to a data set before 387, the, what's the word? The confidence interval increases dramatically, right? But once you get to 387, it's like at that 95% and it may go to like 95.1 or 95.2, but the rate at which it increases is significantly less. So we, so 387 is the number. Obviously, if you're trying to test all these disparate markets. Maybe you need 387 in Detroit and 387 in Miami, et cetera. But 387 is like the minimum statistical amount that you need in order to feel confident. And the reason I'm bringing that up is, A, I thought it was cool. But B, if we tested this and it was like, all right, we called 400 business owners. And these were the percentage response rates. Then we have a much higher

level of confidence in whether or not there's a there in testing it. And 400 to me is doable. Yes, it would cost us some money, but it's very doable for us to get a response from 400 of these business owners. Yeah, I agree. Because like I texted 200. I got a 15% response rate through 30 people responded. I have no idea what the other 170 people are thinking. Or like, if we call them on the phone. Think back at how many times you've done these types of tests in things that you've launched.

Like, and any time that you've done one where you've got more than 400 responses, has that played out? Has it been like, oh, yeah, that was validating. to talk to that many people. Well, you've done a lot of these types of cold campaigns where you've reached out and tried to get information from people. Does that numbers sound right to you? Like, is it like, yeah, if we had that many, I'd feel. 400's a lot.

Yeah. I think, because that would be 400 people you talk to or text with, right? Not just people that you reach out to at least. 400 people you get data from. Correct. That's a lot. Yeah.

That would be very, very strong. Like, I would for sure launch a business if it looked good after I spoke to 400 people. I mean, and he was also saying, like, you can do smaller data. depending on the quality of the respondents, right? So, yeah, probably less respondents needed in order for us to get a good sense of where the market is. But I just found that interesting that like 387 was not. And I may be like off, somebody listening to this, some data science that's listening to this. It's like, technically speaking, actually, if you look at the standard deviation, you actually can't go past sigma because once sigma becomes an alpha, the beta kicks in.

And if you're a beta, well, bang it. Anyways. That's awesome. Anyway, so I've been excited about that. I think it's a great idea. I love it. Yeah. All right. What do you got? What do you got? You got a match? I don't know if it will be as good, but I hope you're ready for this. It won't.

You know who Tyler Fasela is on Twitter? Mm-hmm. Mm-hmm. Okay. So Tyler, yeah, I talked to him. And what I do anytime I have an interview, I record the interview, and then I take some notes during the interview. But I listen back to it after what, after it's been edited and we're about to release it, and I take a bunch of notes. And in the notes, I like to hit on notes. numbers. I like to be very specific because it's a 30 minute conversation. But if I'm trying to get someone to listen to it, I want them to hear up front like, hey, here are the high level facts.

Right. So I did this with Tyler. And as I was listening back to it, it just was like boggling my mind, this business. So he has a laundromat. He got into the business because his father-in-law had an original laundromat. They bought into it, had some equity. And they've now opened three laundromats from scratch. So they found locations and then they built them from scratch. And so they're beautiful laundromats. But here's what's crazy to me. These are the economics of the business. I don't know if you knew this.

Do you know, I guess, like what is the average laundromats revenue? Just one location, average laundromat. I would say mid six figures. Okay. 785, I think, was the number that Tyler gave me. Okay. It was like, 785 is like the average revenue. Is that like his laundromat or an actual average?

because some of them are small and crappy and run down, right? Yeah, his laundromats. And I, like, as we keep talking, you'll see why I'm using his is the number. But yes, his laundromats, 785. After they've gotten to like stabilization after five years, he's like, they can get to like 1.2. But I'm like, okay, I'll use the 7, 785 number. What is the NOI on that? The net auto-operating income.

Say again? 35%. 50%. Jeez. 50%. It was shocking to me. Because I'm like, it's like a real estate. Like you have real estate and you have 50% margins.

And so as he talked about it with me, it started making sense. So his whole strategy is he goes and he identifies using Google Maps. Like, okay, where are all the laundromats? Where do I see a cluster of laundromats? Okay, cool. And he then goes to that cluster, like literally physically goes to that cluster and he looks at those laundromats. And if they're all, he calls them zombie laundromats.

If they're all zombie laundromats like they're built 30 years ago and they just have never been updated and they've extracted the ton of value out of the community, he's like, okay, there's a market here, right? Like he doesn't consider them a competitor? Kind of, right? He's looking at that and he's like, if these three crappy laundromats all existing within a mile square radius is what he uses can support themselves, I know if I build a brand new one in the same mile radius, I am going to get people to come to it.

So I'm going to put one of the, at least one of these out of business, but I know that there's demand here. So then he goes and finds the space. He builds from scratch. He launches, and he's done this several times and obviously hyper-successful. And his laundromats just print money. But he like went in granular detail. He's like, I look in a mile square radius. I look at the demographics. I look at the schools. I look at how many apartment complexes are and whether or not they have on-site laundry. I look at the square footage of these laundromats. I look at when they were updated. So it's like he has this whole thing, but it didn't sound super complicated to me. It's like that seems easy.

Like we could go out and literally find a square, you know, a mile radius and decide, hey, let's launch a laundromat here. And then the marketing, he's like, all we do is we have a press release. We do a community opening event and then maybe some Facebook marketing ads. But that's about it. And anyway. He like Ohio. He's like there.

Yeah. Okay. He's in Ohio. But I was thinking more and more about this. And I'm like, do you think this is something we could do? Like maybe we partnered with an operator who has capital and we're like, hey, look, we'll just do the market research for you. We don't need to like even have a piece. Maybe we have like 10% piece, but just pay us to do the market research.

We'll help you find the locations. And then you build. Because again, I'm trying to get away from like operationally intensive businesses. And I don't necessarily want to take out a ton of debt in order to build these things. But it just seemed like there was something there to me, just in identifying opportunities for people with capital. to go and invest and create these to build these laundromats in communities that are either underserved or haven't been updated in a long time. So you're saying, do you think there's a business opportunity to do the market research for

people like Tyler? Yes. Yeah, not to go in and just build it ourselves, right? Like, obviously, there's an opportunity there. Right. Yeah, we don't want it. That's capital intensive. We've got to take out loans.

We got it like, it's just a whole long process. Could we just be a company? It's like, hey, outsources to us. We'll find you the opportunities and kick us a couple percentage points on the deal. plus this fee. Right. I think the hard part with that is like they would be outsourcing the most important decision or one of the most important decisions, right? I would have a lot of anxiety putting that in someone else's hand, especially if I already opened four or five of these myself, right? Because if you get that wrong, if some third party agency screws that up, you could be done.

Tyler's company, like he's already doing it internally. They may not be the best to do it. But maybe it's a family office or maybe it's a private equity. fund that's like, hey, we want to roll up some laundromats and you just go through the strategy of how to identify. I'm trying to marry this idea that we have, which is like, we don't want to be capital intensive. We don't want to be in something where we're taking out a ton of debt, but we still want to take advantage of this shift because there are a lot of these zombie laundromats, right, that were built 20, 30 years ago and just crappy and run down. So there's opportunity for you to go in and leveraging new real estate and capture the market. But how could we do that?

Yeah, I think that's definitely an opportunity because I know that there are big, companies that do this for like restaurant chains or Starbucks or coffee chains. And it's like, hey, here's your $10,000 report open right here or right there. So this is already being done. The question is like, is it being done for this industry? I think the hardest part is just finding that sub segment of the industry that would pay for this. Like they can't be too big. It can't be their first location. It can't be their fifth. Maybe it has to be like someone that just got funded and they're just trying to sprint or someone that's really big and they just need more bandwidth. Well, and think of the mobile home parks that you're partnering with right now.

They're not doing this, but there are companies that go out and generate leads for mobile home parks and then sell those leads to people, right? So it's like it's not, it's different because leads are you're buying an existing asset. This is like market research to find opportunities to then go and grow. But it's not necessarily novel. It's not like we're just creating something whole cloth. Yeah. Yeah, I thought about doing this.

I don't know if I ever told you this, but I've got a good friend at church. His name's John. He owns like an addiction recovery treatment center. And he lives in Allen, but it's in Frisco. It's like 35 minutes away. He's doing really well. He's growing fast. He wants to open a second location in DFW.

So we were on a cruise together like a year or two ago, just browing down. I'm like, where are you going to open? He's like, I don't know, you know, like Garland or, you know. And he's just kind of. talking about anecdotal stuff, you know, I get a lot of customers from McKinney. So I was like, dude, you know, like, we could figure this out pretty easily. Like what? I'm like, well, you're going to outscraper, you scrape it, you know, run and find a baseline.

And he's like, well, I was like, let me get home, get in front of my computer. I'll send you a loom. He's like, what's loom? I'm like, dude, just chill out, boomer. Are you my grandson? I went home and I, it literally took about 18 minutes. Start to finish. I loomed the whole thing.

And it was very clear, like very consistent. convincing we got to the end of it and I laid it all out on a map. I'm like, here's where all your competitors are. We're not going to include these guys because that's a hospital. That's not your competitor. Yada, yada, yeah. And it's like, turns out there's a big hole in the market in Allen, which is where you live. Like, wow, this is really great for you. And so I sent it to him and he's like, dude, this is amazing. He's like, what can I give you? What can I pay you? I'm like, no, nothing. He's like, I was thinking, Alan, because of all these anecdotal data points. Yada, yeah, yeah. He's like, it feels very confirming that you're saying this.

And I think like Little Elm, there were a couple other that were like two or second or third place. And he's like, that makes so much sense. Maybe the business would be like a competitive analysis for companies that are thinking about expanding. Yeah. So I was like, man, I could have charged someone like a thousand bucks for that. And it could have taken 20 minutes. But it's like, how do you find that John? Like, how do you find that guy?

It's a very specific person. I think too, because a lot of businesses, theoretically. know how to do that. They're like, well, in order for me to know what the competitive landscape looks like in my market, I'd need to know how many competitors I have. Of course, that makes sense. And then compare it to the population and like they could get there. Maybe most won't get there, but many of them could get there. It's the next step where it's like, all right, so do I have to go to Google and like search for it and then write them all down and like, how do I get the list that's comprehensive enough for me to understand whether or not all of my competitors are in here?

it's that step which using the outscraper or understanding the ratios of population anyways just knowing where to pull data I think would be an interesting business it's a data business it's a market analysis business but yeah that's interesting I would think that your prime customer would be someone just like John that they opened one location maybe it's a taco shop maybe it's addiction recovery dental office whatever and they opened there because that's where they lived right it wasn't really strategic and it worked and they're growing and now it's like where do I I go next. That's where they really need help because they didn't, they never done that research before.

And then you could go scrape a list of local businesses and scrub out all the ones that have two plus locations and do cold outreach to the ones that only have one. That's just where I was going to go. The cold outreach is the ones that just have one location. And it would be super easy, right? Like you filter outscraber by their business type or industry type. And you just say like, hey, here's an industry analysis or here's a market competitive market analysis of your business.

And I don't know how you would tease it, right? Maybe it's like, here are, here's 50% of the report. But would you be interested in knowing more about, you know, how to either grow into another market or drum up more business for your market? That would be such effective cold outreach. Like you said, he's seen that for the first time and he's like, holy, like there's something different about looking at it on a map and being and understanding like, oh, there's a hole in the market here.

Yeah. Right? Like, or maybe, maybe you send them the map and the hole in the market is just in a mile radius and the rest is grayed out. because it's like, hey, if you want to see the rest of the market in DFW, let us know. We'd love to show you because maybe they have ambitions to go. Maybe they're in Frisco and they want to go to grapevine, right? Or maybe they're, I don't even in Paris up in the middle of nowhere and they want to come down to Dallas.

Like that would be a really interesting business model. There would be. Yeah, I wonder like what the market, what price the market would bear for a report like that. I'm sure it depends on the industry. A dentist might pay a lot more than a restaurant owner. Well, I think you'd have to find someone who's actively thinking about expanding. That's the hard part. You can't know that until you reach out to all of them.

No. And I probably wouldn't filter out the multiple chain locations. Yeah, because they could be looking for number three or four. Exactly. I might filter out the franchises, right? Like, I might be like, all right, Chick-fil-A, McDonald's. I'm not worried about those, but I'm going to target all the other burger chains that are in DFW that are privately owned.

because those in fact the ones who have two, three locations are probably prime potential customers because they've already got a couple. They're probably looking for that. They prove that they're, yeah, I would agree. Maybe two locations is a sweet spot because they prove that they're already, most people don't want to expand.

Most people will stay at one location forever. So you have two. It's like, all right. Dude, think about this. I love this idea. Think about this. You do it.

You test, you're like, hey, here's the competitive landscape of your market. market. Oh, that's cool. You send it to them. They look at it. And they're like, oh, there's all these holes in all these different areas. But what do I do with this data? It's more raw, but interesting. What do I do with this data? How do I look at it? It's like, hey, contact us for more. They contact us. And it's like, hey, we could run a Facebook marketplace ad for you, campaign for you.

We could do a keyword search for you. There's other validators that we could run in order to show them where holes are in the market. We'll show you how many people in Allen are searching for addiction recovery centers over time, right? That, yes, could they do it themselves? Yeah, but they just don't know where to go and actually do those things. So it's like showing them the opportunity, but then also working them through the rest of the analysis of whether or not there's an opportunity for them to expand. Yeah.

Yeah, like you could have different price points. You could say like, all right, we're only going to do a location analysis or we're going to do a keyword analysis too and location. It's like 500, 800, 500. I like that. What I don't like is it's. It's not really recurring. You've got to keep chasing down these deals.

It could be recurring if they keep growing. Yeah. But I think even the small franchises, like there's a place in DFW called Haystack. It's a burger place. But it's a franchise. I feel like with physical location franchises, that's a core part of what the franchisor does in site selection. Absolutely.

So it's like you can't really get them. Chick-fil-A. Walmart. I mean, Chick-Fleigh is huge, right? But I'm saying even the small franchises, they're probably not your customers either. No, I'm just saying like that's one of the core competitive advantages that they have is they have experience and people who are actually looking at the competitive market analysis and saying, oh, on the corner of Eagle and Chinden, which where I live, there are X number of cars that pass that way. And this is how we do our analysis. And then they're scraping all the rest of the demographics and they're finding these locations. Individual mom and pop shops like they don't even have time. Even if they potentially had the skill set, they don't even have time to sit down and do a competitive analysis. What data are they even supposed to. to pull. Do they pull it all into Excel? Like, where do they scrape it from? What's quality data? What's not quality data? There's a lot there. But to your point, yeah, it's not recurring.

It's more project-based. And I think there was like, if there was a way we could automate a lot of it, that would be helpful. But it seems like it's because it's consulting. It's very much like, okay, I got to go out. I got to meet with you. I got to do a bid. We would have to find someone who could do most of those things and then walk them through the, analysis. I think you could train someone pretty easily to do it. I'm thinking about traffic counts too. Like you go to the Texas DOT website, you can get traffic counts.

People aren't going to think to do that, you know? Like would you other have your restaurant on a 10,000 count street or 30,000 count street? And they're not thinking so granularly as like a lot of people are like, I'm going to open my burger shop here because there are no burger shops over here. You might want to open near other burger shops because that's where people go to buy burgers, you know? Yeah. Like I did a video of this in Greece where it was like there were gelato shops on every corner. And it was like, geez, I've never opened a gelato shop here. It's saturated.

It's like, no, this is where you go. Because this is where people go to buy gelato. Yeah. This is gelato alley, my friend. Yeah. You want to open a top tier barbecue restaurant. You go to Austin where all the top tier barbecue restaurants are. You don't go to somewhere where there's no barbecue restaurant.

Dude. And that's really true, too. The other thing, they're not even looking at the second order. effects of like, okay, here's the traffic count on this street in Allen. Cool. What's the growth rate of Allen year over year? Right? Like Allen is growing at a compounded 9% a year. The rest of the country is growing at 2.5% a year. Well, just by virtue of the fact of going to Allen, because it's outpacing the growth rate of the rest of the country, there's going to be a market for burgers because at some point the market's going to grow big enough where the existing offering is

not enough to meet the demand. Right. So it's like, okay, cool, that may or may not be a quote unquote saturated market, but where is it going to be in five or 10 years from now? And can you position yourself to be in a good spot? Especially if you have a good brand and you have a good location and you have a good word of mouth and association with that brand. Like looking out in the next five or 10 years, that brand is not going away. So where else could we move into to take advantage of it? Yeah, I just, I was thinking back to the B2B stump grinding idea. I wonder if the play here is to go through commercial real estate companies that are looking for sites for restaurants and say, hey, like outsource all your marketing to us.

You can just upcharge it to your consumer so you don't have to eat the cost. And we'll say, hey, only look for a 4,000 square foot restaurant in this radius because this is where they're most likely to be successful. Therefore, this is where they're most likely to want to add a third location with you, right? So you're going to give us five grand for this report. You're going to tack that on to your fees. And then you're going to make all your money from signing long term leases. Right. And then you're going to be more confident in their ability to not default on those leases and to find success in that market because the market analysis.

And you're going to look really smart. You could say that you did this research. We don't care. You can white label it. Why label it? What does it matter to us? Yeah. And we could send them samples of ones that we've done in the past. I love that. All right. Cool. All right. I'll start it tomorrow.