The Startup Ideas Podcast - Building a Mini Berkshire Hathaway

Episode Date: September 1, 2022

Are you ready to buy the business that will finance your future? Today we share the secret to generating wealth through acquisitions, explain why you need to invest for the long term, and teach the art of the deal. Hosts Sahil Bloom and Greg Isenberg are joined by the founders of Enduring Ventures, Xavier Helgesen and Sieva Kozinsky, who are building the modern Berkshire Hathaway. Xavier and Sieva share the origin stories that shaped them into blue-collar entrepreneurs and explain why QSBS creates limitless economic opportunities in America. Finally, Sahil and Greg share what they believe to be the best businesses in the world and ask for your help to break down their unit economics. ►► Want more community? Learn more here: http://trwih.comTHIS EPISODESieva Kozinsky: https://twitter.com/SievaKozinskyXavier Helgesen: https://twitter.com/xavierhelgesenEnduring Ventures: https://www.enduring.ventures/Better World Books: https://www.betterworldbooks.com/ZOLA Electric: https://zolaelectric.com/Sahil Bloom: https://twitter.com/SahilBloomGreg Isenberg: https://twitter.com/gregisenbergProduction & Marketing Team: https://penname.co/FIND US ON SOCIALTwitter: https://twitter.com/_trwihInstagram: https://www.instagram.com/_trwihTikTok: https://www.tiktok.com/@_trwihWeb: https://trwih.comSpotify: https://open.spotify.com/show/6aB0v6amo3a8hgTCjlTlvhApple: https://podcasts.apple.com/us/podcast/where-it-happens/id1593424985SHOW NOTES00:21 Xavier’s Origin Story06:01 Xavier’s 2nd Company 07:58 Better World Books & Zola Electric 12:12 Sieva’s Immigrant Origin Story15:20 What is Enduring Ventures?23:44 A Search Fund on Steroids30:20 Patience is Key33:58 Where Buffet is Right & Wrong 39:24 Great Companies = Great Narratives43:21 Buying Businesses that Power America 45:40 Financing the Deal 51:40 QSBS Matters54:25 Xavier’s Advise59:30 Sieva’s Scaffolding Story 1:03:06 The Best Business’s in the World 1:06:04 Where to Find Xavier & Sieva

When you look at the risk return of going and buying a company and being on your own and being on the ownership side of the table, it's truly life-changing not only for you, but potentially for your children, your grandchildren. So the risk-reward trade-off is heavily in the reward favor. See, Ava, Xavier, so excited to have you guys on for this episode. It's one that both Greg and I have been wanting to record for a while. I mean, obviously we're all friends and We know you guys, but from afar getting to see the rise of what you've been doing and building over the last year plus as we've known each other. But even more, publicly, as you guys have started to share more about it and kind of build in public, quote unquote, around that journey and around really this like opportunity that I think a lot of people have to kind of opt out of like traditional employment and, you know, potentially go and build and acquire and boring. businesses and kind of the rise of like boring business Twitter as it were. So super excited to

kind of just like dive into the details and and dig into things, but thought it would be helpful for everyone, you know, and honestly myself included to just like set the stage a little bit on your guys' backgrounds and really like where you came from and how you, how you kind of wound up with the insight to start building enduring ventures. And we can dig into the details on what it is and the whole story and what you guys are working on, but we'd love to kind of set the stage because you're both independently quite amazing and would love to start there.

So Xavier, maybe we can start with you and would love to just kind of hear more about you and like, you know, you were born and now you're here. What happened in between? Well, I'm a little older, so that's a long and boring story. So I'll give you the short version is I was always an entrepreneur. I think I was mowing lawns when I was 11, at least a mini golf course when I was 14. So I was into boring businesses early.

Pause. Pause. You leased a mini golf course when you were 14? Yeah, I was, I was frustrated that you couldn't get a job, like a proper job, until you were 16 or some would, some would take you when you were 15. And I really wanted to earn money and I was, I was willing to work, you know, whatever was required. And so I found out about this opportunity where the small town I grew up, the mini golf course, they weren't even going to run it because they just paid some kid to sit there all summer and then I lost money. And so I worked out a deal with the guy who was head at the Parks Department. And the deal was basically, I get 90 and he gets 10, but he doesn't have any fixed cost. I have to fix up the mini golf course and then I have to run it and whatever I make I make.

So that was my introduction into low marginal cost business because it turns out the key to a mini golf course is just making it look busy even if people aren't paying. And then other people want to go play on the mini golf course and pay for it. So that's amazing. Sorry, I cut you off. I had to ask. That's also the key of the nightclub business, I think, as well. Creating the buzz.

Creating the buzz. So we sold a few family passes comically cheap. It was $20 for the whole summer. And there were some families who would then just send their kids down to, like, play minigolf for four hours. hours a day so they could get some work done. And then that created enough commotion there that other people would walk up and play. We also illegally sold cold drinks and chips. I don't think we were supposed to do that, but there was no other convenience store in town. So we seized on the window. Love it. It's like your version of the lemonade stand in a much more complicated manner.

I love that. It's just been like top of mind for me. The reason I paused you is because, you know, I have this newborn, you know, little boy and my wife and I have been talking a lot about how I didn't feel like I was raised in a household where entrepreneurship was, you know, really a focus. My dad was an academic. And my mom actually did have a business, although I never, we never really, it is a consulting business. And so it kind of always thought of it more as like services, not really super scalable, you know, tech enabled type business. more like renting out your time. And, you know, I just felt like growing up, it was never top of mind for me to go and do entrepreneurial things. And now that I'm exposed to this world and I meet guys like you, like Greg, and I spend time with these, you know, people who as kids were just off doing business stuff and like randomly cobbling together businesses and trying different things and like going door to door and selling stuff and all of that. I just think about it a lot now with my wife of like, I want to prioritize that same set of principles and skills in my son as he gets older and like be able to kind of foster that same creative entrepreneurial spirit in him that I feel

like so many of my really smart friends built from a young age. Yeah, you know, and it's funny, like my parents were not entrepreneurs at all. My brothers were not entrepreneurs. And so I think about this with my own kids too. And I think, you know, I got to start with the motivation. So they got to actually have something they want because like my middle brother, or would just keep any money he earned in a Pringles jar, never spend any money on anything. And so it was very hard for him to get motivated enough to go earn money, where for me, I was really into, I was into early computers,

and I was into games, and that was like a bottomless pit of money that you could sink into, like, mid-90s computers. And so that was what was motivating me to go out and earn my own money because I wasn't going to get that on my own. So I always think it starts with the motivation, And then once you have the motivation, it's like, okay, well, here's, I'm not going to just give you the money, but here's a path where you could earn it. I think that's probably the best way to approach that. Yeah, so I also started an early proto-college social network in college, which would have been like year 2000.

So that was another, that was my first entrepreneurial adventure where like it went bigger than like just a small born business. It was like the whole campus was using this site and that was kind of cool. I was a little early with that idea, but I was going to go to Silicon Valley and try to start a company around it in 2001 when the crash happened. So that was what got me. Was it literally like a Facebook or like social network type experience? Yeah, we had a e-dog book feature. So we had a feature on it called the e-dog book. We had peer-to-peer teacher reviews.

We're actually the biggest thing on our platform. We hadn't gotten the social dynamic quite right. I would say we hadn't thought of likes. I think likes were sort of the early genius of Facebook's viral growth. The other thing we were categorically wrong about is we thought that hyperlocal was the right approach. So our idea was like I was ND today where I went to school in Notre Dame and then we did a Yale today and we did a pen today. And the other ones just didn't take off in the same way that the ND one did because I so intimately understood that campus and was able to kind of make a perfect product for it.

But a lot of the features on the site ended up being like large standalone websites, someone else did in their own right. Like I never made any money off that, but like rate my teachers is like a big platform that we were doing kind of way back in those and that proto, that swamp, internet swamp of 99. And so that, I guess it was really necessary. in some ways that set me off selling textbooks on the internet. It was like in a way back to doing a boring business in a realm I understood, which was college. And I'll make a really long

story short, but I founded a company called Better World Books. That's a social impact company. So the idea is it raises money for literacy and for libraries by taking the on-run books of the world and selling them on the internet. So lots of people donate books to their alma mater, for example, Maybe you bring your whole book collection to Stanford when you move. And as students also often don't need the books at the end of class and don't have the patience to stand in line and sell them. And so better world books ended up being built first around college book drives and then around sort of every unwanted book to take those books,

physically take possession of them, sell them in a warehouse, put them in a warehouse, sell them on the internet, primarily through Amazon and eBay originally, now primarily through its own website. And that was sort of a 20-year journey of. I think the company has sold an aggregate well over a billion dollars worth of books on the internet since I founded it.

Whoa, that's crazy. Was it like kind of Chegg before Chegg? Yeah, we actually helped get Chegg off the ground. We had a JV with Chegg for a little while. We should have gotten some equity in it. But it was, Chegg was focused on textbook rental. And we were really focused on taking books, essentially being outsourced online sales and sometimes organizing the book drives as well. So we would almost never pay for a book.

Like New York Public Library is a good example. They would send a semi-truckloads full of books that the good people of New York had donated to them. And we would market that on the internet and sell those books. and then we'd revenue share with them and with the literacy program that they picked. And that was probably New York Public Library alone was probably a $2.5 million a year account where they would ship us to books. We would sell them. It's kind of a cool, like there's a, Greg, you and I have talked about this in general.

It's like there's a cool business framework around that same type of, you know, just like general, generalized idea and model, which is like, you know, take something that is not there. core business model and that they are bad at or have no idea how to do and sort of just like abstract all the complexity away from them of that process and like you take on all the headaches and the challenges of it but you're quite good at it for whatever reason you figured out how to streamline that process and so like for new york public library they have no idea how to sell things online it's just not their core competency they have no clue how to deal with it they would rather pay someone and be happy to pay the margin of that person to just get rid of it and get it off their

hands. I saw a business recently that was trying to do that with like lost and found for big arenas and, you know, big locations, which I thought was kind of neat. So like those places don't want to have to deal with, you know, logging and categorizing lost and found. And, you know, this company was basically coming in and saying, like, we'll do that. We'll abstract all the complexity away and make it a much better experience for your customers. You should be happy because it'll, you know, create a much better, more seamless experience. I think it's kind of just like an interesting general framework. And then you ended up in the solar space, right?

Like in energy. Yeah. So I worked on Betterwell books for about eight years. I went to business school for a year. And then I was chairman of Better World Books after that. But I started this distributed solar company in Africa. Also a social impact business. So the idea was to make solar accessible to the mass market in Africa, which

it really wasn't at the time. And that was sort of 2011. So the idea was if people could pay in small increments like a prepaid mobile for the power that a small solar power system produces, then that would be cheaper and better

than their alternative, which is paying for kerosene for lighting, for example. There's actually a non-trivial industry in Africa paying other people to charge your cell phone. So the going rate is about 25 cents a charge to have the guy at the shop charge your cell phone. Crazy. Crazy. Crazy. All right. So we've got Xavier's

background. And there's a lot to unpack there too. Xavier, I want to give you the, I want to give you the time of day before we dive into all the fun and games on Enduring. Yeah, sure. And I'm happy to tell you a little bit about my career. I think in some ways, entrepreneurial like Xavier's. He's a little bit older and wiser than I am. And all of us. I guess your original question was from birth until now. And it's probably worth noting that my story or kind of the decisions that I make in this world, I think are largely impacted by the immigrant story in America. I don't know if I've told you the soil,

but my mother immigrated to the U.S. from the Soviet Union in the early 90s. There was a Jewish refugee program going on at the time. And she came over with me. I was a baby at the time. She didn't speak the language. She had heard that America was this better place and that she could create a better future for her kids. And it was just this incredible jump that she made. And I think, you know, when I reflect on like what drives me, what gets me up in the morning, what keeps me going,

it's really to do honor by the kind of risks that she took and the effort that she put in in those early days. And I think I think about that a lot. Xavier and I end up talking about that quite a bit as well. So I moseyed kind of through life living in California. I had always wanted to be a doctor. In college, I took pre-med, I interned and kind of shadowed some doctors at the time. And then I think, you know, became an accidental entrepreneur or business person. I wanted to start an education company. I felt like there weren't enough resources at my public college to support students. So I built a tutoring company and then a note sharing company.

And kind of a few startups later, I guess fast forward to most recently, I had built a health care network. so totally different industries. I pivoted out of education. I went into healthcare and built this network of clinical research sites where we powered clinical trials for large pharmaceutical companies. So our customers were companies like Pfizer and Novartis and a Novoderm. And we built this network and we used technology in order to connect patients who needed access to trials, as well as those pharmaceutical companies who,

wanted to accelerate how fast they were getting patients into those trials because it's so expensive to run a trial or to just keep one running. So that was pretty successful and I ended up selling that business right before Xavier and I started enduring ventures. Got it. Got it. Okay, so you guys came from both entrepreneurial but very different backgrounds. Presumably you met along the way and had become friends. What was the insight that led to the creation of Enduring Ventures? And then can you just give us the quick point on like what is Enduring Ventures? What are you actually creating?

And then I want to actually get into the like nitty gritty of this model because I think, you know, the general characterization that I would have for it, which I think, you know, we've talked about on Twitter in the past is like you're building a baby Berkshire Hathaway, Warren Buffett and Charlie Munger's brainchild. and there's something amazing about, you know, two guys setting out to kind of go and do that and sharing in public that journey and how you're doing it and, like, really the mechanics and getting into the weeds of how you're going about that process. So I want to get into the nitty gritty of it because I think there's probably a lot of people

out there listening that, you know, they may want to pursue something similar in the future. So can you just talk a little bit about that founding insight and then let's dive into it? And one thing I just want to highlight. So before we get into that, because I think that's a really good, like I also want to dive into that. But Sava and Xavier were living in San Francisco at the time. At least I met you guys in 2016 in San Francisco. I didn't know that. Yeah, Sean Puri was hosting these masterminds.

Before Sean Puri had my first million as a place to like get his ideas out there, Sean Porey basically, you know, every few weeks would invite different entrepreneurs into this room in San Francisco at his office and we would basically order pizza, hang out and just talk about ideas. I show up, you know, I was going to these things often. And the people that were showing up were like the Nikita Beers of the world social founder, the Josh Buckley's of the world who at the time had a video game. Alex 2, who's the founder ofcom.com. Like, mostly just mobile apps with social features or social apps with mobile features. Like, that's basically where it was at. And I show up and these two guys are in the room.

One guy, Xavier, is like working on this thing in Africa about solar energy. Way more ambitious. And so I was like, what? And SIEva was, I don't remember exactly. I think you were working on your education thing at the time. It might have been your, yeah, I think it might have been no chairing at the time. And which was also like completely like different than what people were working on it. So there's something that you two have, which I find interesting.

And I'm curious your perspective on it, which is you don't exactly. go toward the trend is. You just kind of come up with ideas that connect with you and you just are curious and you follow it. Is that right? I mean, I think that's within hand grenade range. I think we're also both very cheap. I think that's something to know about us.

And so in some ways we've been much more comfortable in the world. I had this experience of building a bootstrap company with Better World Books and then having the complete opposite with the solar company you had to raise absolute boatloads of capital. So, you know, over $200 million raised just on my watch for that business. And the whole raising boatloads of capital, that was like 70% of my job was like, you know, not just the like, oh, making the pitch, like that's the easy part, but really holding together a high-powered board that had the maybe different opinions on which way they should go on, you know, on sort of navigating funding rounds that don't always happen at the time when the market wants

them to happen. And so they can be tough to close. So I think for me personally, getting back to the fundamental business was really interesting. I think that's something Siva and I kind of share is like both a sort of broader view about like social impact beyond just like let's make something that grows as fast as possible and we can sell for as much as possible. And then also like the real art and fundamentals of business. as a practice, I guess, rather than like, what is the hypey thing right now that you could dive into that if you're lucky, someone will buy your company? And I don't see it.

But what do you think about that? Well, I was going to say, you know, I spent five years just fanboying Xavier from afar. I thought he was like the coolest guy, the coolest entrepreneur. He was building this social impact business in Africa, lighting millions of people's homes. you know, raising capital for flying back and forth between Europe, Africa, and California, and obviously very positively affecting people's lives, but simultaneously building this incredible recurring revenue kind of commodity business that people really needed. So, you know, that was something that I really looked up to him for. And it was, Greg, it was really in that

room, in that mastermind that Sean used to host where Xavier and I became really good friends. And it wasn't until many years later that we came up with the idea for enduring, but that certainly was the genesis of it. And Samin, do you remember what the actual, like when we came up with the idea? I feel like it evolved so organically. Like, I don't remember what specific conversation it was. It was like, oh, let's do this thing. Yeah, I don't recall the exact day.

I think it really started with, you know, you'd hired a CEO at your previous business. and for years you guys had worked together, you were ready to move on to your next thing. And we first decided that we wanted to do something together. And then it evolved into this conversation around, well, the next thing we do, let's reverse engineer. What is the last business we would ever want to work on, right? Like what is something that we would want to work on for the next 20, 30 or 40 years, which is really different from our startup experience, both,

I know you and I talked about this where you start something, in your head, you're like, I'm going to sprint after this for five to ten years, and then I'm going to sell it, or I'll hire CEO and leave. And the idea for Enduring was really, how can we think long-term about something? And then that's when I think we really pointed our laser towards Warren Buffett and what he had done with Berkshire Hathaway. And I think we're always fanboys of his. Yeah. But that's how that.

anyone that had had that experience, you know, of like being interested in investing and, you know, reading the Berkshire Hathaway annual letters, you know, probably had that like same, uh, feeling of like fanboying around it, right? Like, you know, the general story around Berkshire and, and Warren Buffett, just for anyone that doesn't know it, that you should go read it if you're at all interested in investing. But basically they bought, you know, he bought a dying textile mill, Berkshire Hathaway. And it was cash flow. pretty significantly, I think on the order several million dollars a year. And at the time, he was like reinvesting, you know, the money into the dying textile industry, quickly

realized that that wasn't the smartest way to reinvest the dollars for the best long-term compounding return. And so started reinvesting the dollars from that, from that business into higher profit, you know, and more kind of like macro growth industries, which, you know, has now grown into a massive, of hundreds of billions of dollar conglomerate, or not conglomerate holding company of insurance and, you know, big other like heavy industrial businesses and BNSF and, you know, the railroad company, a whole lot of other things, but basically started this engine of taking cash flows and reinvesting them into, you know, long-term compounders. The reason I say that a lot of people fanboy over it is I think a lot of people read it,

fan boy over the idea, sounds really sweet, oh, so cool, you know, quote Warren Buffett all the time on Twitter. Everybody be greedy when everyone's fearful. Like it's the, it's all in vogue to quote it. Very few people actually go and do anything about it and go and build around this general concept and idea. You guys did. So can we just like dive into it a little bit? From the get go, did you envision the structure that it was going to take, you know, and kind of the way that that created certain advantages from a tax perspective and from an ability to reinvest. that really attractive, you know, kind of compound growth rates. Like, what was the general vision for it from the get-go?

Yeah, I can start diving into that. So, you know, the kind of search fund and private equity road is really well-trotted. So if you know, if you heard of search funds, that's essentially where an MBA goes and raises a bit of money to go try to acquire a business and then run it. And essentially, the way they're compensated for doing this looks a lot like private equity, which is fundamentally a sort of more or less a carried interest model. I get, if I sell it for more than I paid for it, then I get some some of the gain in my pocket. Yeah.

And I, you know, I get a. This is worth pausing on. Sorry, sorry, this is worth pausing on because it's actually a really interesting model that has proliferated a ton recently, this search fund model. It's like, it's become, you know this, you guys know this. I spent the first seven years of my career in private equity and several of our employees left, went to business school and then raised search funds. And it became like, you know, it used to be that people would go to Stanford Business School or Harvard Business School and then go take a job at McKinsey or at a private equity fund. And it became the new like in vogue thing to go do after business school

because all of a sudden you're armed with this network of really wealthy people or people that think you're really impressive that you can convince to give you what is effectively a blank check. Like they commit to investing in whatever business you. find. You don't have a business and you say like, okay, let me go raise a $10 million search fund and you now have committed $10 million. It's not in your bank account, but people have committed that they're going to fund it when you find the business. Now you go and, you know, go through phone books or like the digital version of phone books and find a bunch of businesses. You know, maybe you find like a local or regional HVAC business that is not optimized for whatever reason.

you strike up a deal with the, you know, the owner of the business that you're going to acquire it. You call all the people who have given you that commitment to give you the funding for the deal. You buy the business. And then as Xavier alluded to, you kind of, you know, normally it's in the form of like what's called promote, but you effectively have, you know, kind of upside equity that you didn't have to buy into in this, in this business going forward. So if you eventually sell it, you now kind of got paid both a salary while you were running it. And then also on top of that, you know, a big chunk of proceeds if you expand the equity value of the business. But it's a pretty interesting thing for young people to potentially do. If you are coming

out of business school or you do have a network of people that might be willing to fund you to do something, it's a pretty cool opportunity and like a way to take a big swing without having a whole ton of downside risk since it's not your upfront capital. Yeah, no, I really think it is. And in some ways, we sort of started as a search fund on steroids in the sense that we were saying we're not just going to go buy one business, we're going to go buy a portfolio of businesses, but the structure was very different. So we didn't like the promote structure because it fundamentally incentivizes selling and selling as quickly as you can. And I've just been on both sides of that transaction. So both selling a business and buying some businesses

while I've been running businesses. And I know how much work it takes to actually prepare a business for sale if you're going to do it right. And you really run a business differently. There's no two ways about it. You run it differently if you're going to long-term hold it than if you're going to sell for maximum proceeds. And so that that sort of didn't appeal to us. And also on the Buffett side, you had to look at why did Buffett not start a hedge fund? Or he actually disbanded an investment partnership and bought Berkshire. And it's so that he could have stock in one company and then the cash flow could flow up to that company and he could keep allocating it. And so having an internal capital market means I don't need all the friction of going to a pool of investors and pitching them an idea and saying,

here's how much you get and here's how much I get. And or if I need debt going to a bank and saying, okay, well, I need to borrow some money. So I have cash flow from business A and business B needs some investment capital. You can just make that decision and go. and the increasing efficiency is enormous. So even if you don't have the tax advantage, which you do, it's the ideal structure for long-term compounding. You have the flexibility of decision-making and operation

and the portfolio effect that if one of your businesses is suffering, that doesn't mean the whole thing's going to crumble. It just means that that business may run at zero profit for a while, while the other ones keep cranking. So what are the high- points, like what are the high points of the actual structure of it? So if you wanted to set up something that has these features of the vehicle, like the Berkshire Hathaway, the baby Berkshire that you guys are building it enduring, what are the kind of the key features that it would have?

So the most key feature is that it has a parent holding company that's a C corporation. And ideally that C corporation has very few to no employees. Our C corporation has no employees. It's how we actually even see if and I just get a salary from Enduring Consulting Group LLC, which is a subsidiary. So you really try to wall off the the battleship at the top. And the only thing the battleship at the top does is have capital go in and capital go out. So if we need capital to buy businesses, then shareholders buy shares and capital goes into the holding company. If we want to buy a business or invest in one of the ones we already own, then capital goes out in the company. And then the subsidiaries are a combination of C-Corps and LLCs.

We have a whole menagerie. There's probably 16 of them or so that are underneath us right now. And the way that sort of breaks down is if we think a company will eventually raise external capital or spin out into the public markets on its own, if we think it has that potential, then we'll set it up as a C-Corp because that's much more friendly structure to take external capital. If it's just a small cash flow in business that we're just going to reinvest the cash flow, then it's a LLC is a much simpler and lower cost structure to do that in. Got it. Okay. So a couple questions for either one of you guys. So Ccor at the top,

what's the reason for not wanting any people associated with that? Like, why is that? Is that a QSBS thing? Because I know, like, I want to get into QSBSBS and understand that for people as well. It's just risk mitigation, right? Anytime you have an employee, there's some small chance they could, yeah, I could slip on a nice patch on my way to work and have a beef with CA and sue the company, right? Or there's a, there's just small risks that you want to minimize. So for example, we don't have any debt that is guaranteed by the parent company. That's very important because then if business A for some reason has a catastrophic failure, it doesn't take down the rest of the ship. So you're sort of limited in your exposure in each business in terms of the money you invested. And that's that's a real Buffettism is don't lose money. I think that's one aspect of his model that is really underestimated is his view of the downside risk. He's actually okay with relatively low rates of return as long as there's some possibility of growth of the business he bought.

Yeah, I always thought that that was, I always thought that. that that was like a really interesting, just like experiencing sort of two ends of the spectrum of investing personally, like, you know, going from private equity. And honestly, like, I was at a value-oriented private equity shop. So going from that to doing early stage venture stuff, it was a really interesting change because in, you know, in value-oriented private equity, it was like the whole thing, you're basically like, you're underwriting credit almost where you can't lose money. And if you manage to just not lose money, on deals. Like if your bad deals are a 0.7 MOIC, like you get back some of your money, you like

claw your way to a, you know, a shitty 0.05 outcome or something, but you don't just get, you know, washed. It's pretty hard to have a bad fund. If you do that over and over again, if you're like, you know, buying reasonable businesses, because ultimately you have a few that do 5x or 7, like something goes really well and it clicks and it goes your way. And if you can just avoid those like complete washout deals, the fund turns out pretty well. And that's like more the Buffett model versus venture where it's like, yeah, I'm going to get washed out on nine out of ten. And if the one is a thousand X, who cares? And I feel totally fine about the whole fund. Yeah, I think I think Buffett talks a lot about the hardest part about his job is sitting on his

hands and doing nothing. And the reason most people fail is because humans are naturally impatient. We want to be doing something. We can't sit still in a room. So a good. opportunity might come at us and we know it's not the best one, but we jump at it, right? And that's when things can fall apart for your fund. So a big part of our job and something that Xavier and I talk a lot about is there's thousands or millions of great opportunities out there, especially in the segment of the market where we participate in, which is really the SMBs. And if a deal isn't a perfect fit, if it doesn't seem like an obvious growth opportunity or worst case scenario, as you said, we get our money back, then we just pass.

We're happy to spend a few months doing our diligence, understanding of business. And if it doesn't check the boxes, even despite all that effort and maybe costs, we're happy to just wait. We have our little capital engine going. So no matter what, we have cash flow that we can pull on at a later date. What are some Buffetisms that are sacred to you all? Like, you know, you, maybe it's like a few of them that you're just like, wow, this is how we're running enduring. And what are some Buffetisms that you're like, wow, he is totally wrong on that?

And that's a great question. That is a great question. All right. I'll shoot. So I'm going to, I'm terrible at quoting things. So, but he has this notion of management by abdication that he, you. You basically, as long as you have the right CEO and they're compensated properly based on the company's success, the best thing you can do is probably leave them alone. And so, I mean, Buffett took this to incredible extremes where he would not even ask for financial reports from companies for sometimes, you know, years at a time if he trusted the CEO, let alone like a monthly board call or quarterly board call.

He'd just find the right guy and, you know, sort of let them loose. They wouldn't standardize anything. There's literally still 40 people in the Berkshire head office and most of them do the tax return. And it's amazing. And so, you know, they run it like a small business. I mean, it's like, you know, Warren and Charlie and like the two Ted's and like a few other guys like deciding, okay, we'll put 400 million into Snowflake. Okay, we'll buy this $20 billion company. You know, they'll make these monumental decisions with an awfully small team.

And so I think that it's amazing, like despite having had that really clear message from him, we almost immediately went, oh, it'd be nice to have a recruiter on our team. Let's hire a recruiter. And then sure enough, what happens, she was a perfectly good recruiter. But then the CEOs start losing agency. And they're like, oh, well, it's a during Ventures job to recruit my talent. So I'm not going to worry about that. I'm just going to interview whoever they bring me.

And the second people start losing agency, they don't have full responsibility. for the outcome of their business, which is actually the most fulfilling work as a CEO and also the thing that makes the model scalable. And so I think that's also why Buffett can be in industries. He doesn't understand at all because, you know, he doesn't know how to make airplane parts, but he knows what a good airplane part's making company looks like, and he knows what a CEO does when they're running it competently. And so sometimes people will try to say, oh, well, Warren Buffett owns this company, and they have a sexual harassment. or something like that.

You know, Berkshire Hathaway has a bad culture. And like, Berkshire Hathaway doesn't have a culture. It's an owner of these companies. And it doesn't try to impose its culture on the individual organizations. That's really driven by the CEOs. So I think that's something really sacred. And then I'll say one thing I think we could do better if we do it right, which is federating capital allocation. And so Buffett has a view.

that basically it's his job to allocate capital and nobody else's. And I think there's a world where you can train your management teams to also be buyers of businesses in their sector and to smartly allocate capital and step into it. So at first, they propose allocations of capital and we evaluate those and push back. And then eventually, as we get five or ten years on, I would love to be able to just give certain chunks of capital to managers and say, okay, your job is to grow with this, to make one or two acquisitions within your sector or invested in your current operation, whichever way you think you can grow the best.

I mean, one of the things that they have to, that like I personally just feel they need more pushback on, because I like, I'm similar to you guys, right? Like, I've always worshipped a lot of these quotes and I have a ton that I love. But like, their stance on crypto and Web 3 and Bitcoin, and I say day, because I'm grouping Charlie Munger into this. I just think it's kind of silly. Like, Charlie Munger has the quote of, you know, never allow yourself to have an opinion on something when you don't know the other side's argument better than they do. And I just, like, you can say that. That's great. There's no way they have dug into this, I don't think, or understand it as well as the like true, you know, patrons of that industry.

And yet they are extremely vocal about their distaste for it. And that's like, I get it. But I feel like you're talking out of both sides your mouth when you when you do something like that like it it seems like what would be logically consistent with their perspective on on uh you know having an opinion and earning an opinion would be just not saying anything about bitcoin and crypto and just saying like look we don't get it we don't agree with it we're not investing in it but like you know calling it rat poison squared over and over and over again and saying that it's like you know for criminals and degenerates and like it's just maybe it's part of their schick and it's kind of the whole like they're folksy and that's their thing and, you know, they're eating Coca-Cola.

You know, they're like talking about Bitcoin and crypto being the worst thing for human society while like drinking Coca-Cola and, you know, eating candy on stage. I just like that whole thing would be the one area for me where I would just kind of say like, I get it if it's part of their schick, but I just don't agree with it. Yeah, they're definitely creatures of their era. Every great company has a great narrative. and the Berkshire narrative is so strong around productive assets, buying wonderful businesses, never bet against America. Like they've got these sayings that are so iconic.

And I'm a crypto guy. So obviously when I hear icons like Charlie and Buffett saying like Bitcoin is Rap Poison Square, like a tear slowly. goes down my face. But at the same time, if you ask them about gold, non-productive asset, they're not buying gold. They did buy a gold mine, though. Well, that's a productive asset. Which is a productive asset. Yeah.

So I'm not surprised that they latched onto it. It's also, I mean, like, if you look at other things, if you, if you're a believer in crypto in Web 3 and you believe that, you know, it is like a new paradigm for the. internet or the new age of the internet. You know, Warren and Charlie have missed real tech trends, right? Like the time when they bought Apple, how long they passed on Amazon for. Like, they have not been historically very good at, you know, predicting mega trends within tech. And so maybe it's just, you know, circle of competence, right?

Like to go back to one of their things. Maybe it's just out of their wheelhouse and they can, you know, have their narrative and their shtick and the, you know, folksiness, which everyone loves and is. very endearing. And it's just not worth paying attention to. Like, they're going to keep kind of saying their thing about it. One of the ones I absolutely love, which I think relates Siva to one thing you were saying earlier, is like Warren Buffett's quote about like when you find yourself at the bottom of a hole, the first thing you need to do is just stop digging. I think about that so often for my own life and myself. Because to your point earlier, like when I find myself in a bad situation,

whether it's investing or just like personally you know whatever you screw something up you're in a bad spot my first uh instinct is always to create motion i'm like all right i'm going to do this do this do this take this action jump this way do this thing um and oftentimes you realize that like all of that movement you creating is actually just digging yourself deeper into whatever you're in and that the real action that you need to take is in action it's literally just stepping back and doing absolutely nothing for whatever period of time. And I think you alluded to it of like, sometimes the best investment decision is to just do nothing,

to just say no. And I think that that is like the mark for me of a really sophisticated investor is the ability to literally just do nothing. And you tweeted it, I think, recently, Siva, something to the effect of like, you know, the best investments are made at the end of bare markets, not at the beginning of them. And so like being really patient, you know,

we're in this time now where it's like, oh, asset prices are down, do I just start buying things? How do I kind of go about this? And sometimes the answer is literally just do nothing. Just wait, like see how it plays out. I'm thinking about it now with my venture fund. It feels like a great time to have dry powder, but I have no idea how much asset prices are going to reset. And so part of me is like, I kind of just want to pause for three months and just see. Like in three months, what is the average seed valuation going to be? My guess is it's lower than what it is today. And so doing nothing actually right now would really benefit me in terms of the vintage of the fund and how it's going to turn out.

So, I mean, that really resonates with me more broadly. Yeah. And I think Xavier and I, you know, relative to maybe a year ago, we're still investing. We're still looking at opportunities. But we're happy to be patient for another three to six months to see where kind of the world lands, where everything resets. And then pick up the pieces and jump back in with both. So what businesses do you guys buy? And how do you think, like, what's your framework for buying businesses?

We're really looking for what we call boring cash flow businesses. And I don't think, you know, they're not boring to everyone. They're really boring because nobody's writing about them in the news. They're not on the front page of TechCrunch. You usually won't hear about them in the Wall Street Journal. we really want to buy the businesses that power America is how I think about it. You know, really the small mom-and-pop shops of oftentimes blue-collar industries that, you know, that generate good revenue, incredible cash flow, have been going for 20, 30 years.

And now, you know, maybe they don't, their employees don't want to take over or they don't have a son or daughter that wants to take over. of business and enduring ventures is just a perfect buyer for that type of company. Examples might be, you know, we love plumbing service businesses, HVAC service companies. We own a series of businesses that provide broadband to people's homes and offices. So all of these companies that are largely recession resistant have been around for a really long time that we can buy the very reasonable multiple multiple of cash flow that is, which is sometimes different than SaaS, which we can talk about. But that's really our sweet spot.

And it's follow that playbook and do that over and over again over a long period of time. Xavier, do you have anything to add there? Yeah, the only other thing I would add color on that is we really like to see some growth angle to the business. So we'd probably rather buy the number three plumber in a metro rather than the number one. especially if we think that the number one is vulnerable in some way. And so when you're buying businesses, you protect your downside by buying it a little multiple, but you really deliver returns for your investors by getting the business on a growth track,

especially if it wasn't before. And that usually comes with bringing in new energetic management with good ideas. And then how are you actually buying them? So, like, you know, two of the principles that jump out to me here, as far as the advantages of your model, it's like the actual financing structure of how you're financing the deals, you know, to generate returns. And then the whole QSBS thing, which I want to just like understand a little bit better. So how are you financing the deals? Like, are you doing SBA loans? Are you doing seller financing? You know, kind of what's that like actual structure

of how you're doing these deals that people can take away to, you know, to maybe execute in the future for themselves? Yeah. So there's, we've done everything. And, kitchen sink, so everything from all equity to seller finance to SBA, to, you know, sort of, we've gotten close on some mezzanine financing. We haven't actually done one with the mezzanine lender, but there are folks out there who will lend, say, five to ten million dollars. You know, they lend to search funds, for example, which are sort of classic, you know, users of that capital. I would say, if you think about the universe of businesses you can buy. If it's under, say, 500,000 in profits, you ought to figure out a way to buy it personally

as a listener with an SBA loan. That's like a real sweet spot because you can probably buy that business for one to two million dollars and it'll set you for life if you just run it properly and grow it a bit. And how does that work? So like if someone wanted to do that, if I found a half a million dollar a year profit, you know, local landscaping business that I wanted to acquire, How would I actually go about getting an SBA loan for that? And what would, you know, typical kind of terms? Like, what would I be signing up for with that SBA loan? And like how much cash would I have to come out of pocket?

Just like give me a quick, you know, like, napkin math on it. So napkin math is let's say you pay three times cash flow, which is very achievable. Some sectors you'll have to pay more. Some sectors, you can even pay less. But let's just call it three times. So you're paying $1.5 million for it. you are taking an SBA loan for 80 to 90% of that purchase price. So you're coming out of pocket maybe $150,000 to $300,000.

If you don't have that $150,000 to $300,000, you can get an investor to come in and provide most of the capital. If you sort of have no money at all and no assets at all, sometimes the bank will be cautious just because you're a very weak guarantor. There's no sign. You can put in any more money if things go sideways. ways. But those deals can still get done. And then the SBA loan is a 10-year loan. So your payments on that would be awfully reasonable. Let's say $15,000 a month, just spitballing. And so maybe a third of that cash flow goes to service the debt, even without growing the business. Another third goes to pay your living expenses. And then you have a third you can sort of

reinvest in the business. Now, if you can grow that from 500K to a million in cash flow, that million in cash flow is probably worth four or five times. And so you've created two or three million dollars of equity value right there in addition to having obviously really strong monthly cash flow for your personal use. Yeah, this is like the entire model of like the opt out from the traditional track that I find so interesting. And like Greg and I have differences of opinion on like the headaches of potentially running one of these as an individual. which I think are very real and people need to consider because you actually need to go run this business. If you're going to do that form of like a one person, you know, SBA go buy a landscaping business. But it's a pretty neat idea.

Like, you know, I had a friend who was working at Deloitte. And I don't know, he's probably making 150 a year as like a director at Deloitte and doing quite well. But it was like really stressful. I wasn't going to spend time with his family. And he literally went and did this. He bought a local landscaping business and got an SBA loan. And now he's probably making like a million. in a year. He has employees. He's like, you know, probably works like 20 hours a week at this point. It was a

grind for a while as he got it off the ground for sure. But it was kind of a cool way that he just like, within a year opted out from the entire track that he was on, like the partner track at this consultancy and did it. The other thing which you mentioned that I think is so cool that people don't fully appreciate with like an SBA loan or with business loans when you acquire a business. is like people equate it to like getting a mortgage when you buy a house. The challenge with that, with equating it to that is like when you buy a mortgage with a house, you take, sorry, when you buy a house with a mortgage, you're taking a loan against your income. And so like your income is what's kind of providing the collateral that they're,

that they're basing the loan on. When you buy a business with an SBA loan, you're kind of buying the business with itself because you're buying, you're getting the loan against the cash flows of the actual It has nothing to do with you. There might be a personal guarantee on the back end in that case, but you're able to now service the debt with the cash flows from the business. And so like, it's a, it's a unique hack of American capitalism that you're able to buy businesses with loans against the cash flows of those businesses. It's just like a very neat thing. And then, you know, combine that with seller financing, which you can often get in these deals. And you can often do

them with very, very little cash up front, which generates just an absurd return on your equity. That's exactly right. I mean, you should really underwrite 100% equity returns when you, when you do one of these. And that should be a very, that should be a base case. That's like growing the business 10% a year. So cool. It's really, it's really, really juicy. There's some really good SBA lenders out there. Some of them are on Twitter. We have one. We use again and again, happy to send a referral if anyone DM wants to DM me for that. But yeah, it's a really special, I mean, it's an only in America thing. I don't know the equivalent anywhere else in the world. Okay, so that's that one. And then QSBS, you got to hit us with soon here on this,

because I just have so many people like ask me the question. I don't know all of the details. of it. So like just hit me with the kind of high points on like, what is QSBS and why does it matter? And why is it such an unbelievable hack for, you know, for business owners? So if you set up as a C-Corp and you buy original shares, so you invest some money that could be just you register the business online and you put in $50 to get your shares. And then you hold those shares for five years and you sell them. And there's a few other caveats consult your CPA or tax advisor on this, but essentially you can sell up to $10 million of that stock tax free. You may pay state capital gains, but you won't pay federal capital gains on it. You can even go further. You can have your kids buy some of the stock, your wife by some of the

stock, and each person gets a $10 million exclusion. So it's kind of amazing. And this is up to the first $50 million in assets on the balance sheet of the company. So all of our original investors, along with me and SIEVA, have that treatment in the company. And you do as well as an investor, I think about the first eight million that we raised qualified as QSBS. So when you do sell, if you hold for five years, that should be a very clean transaction. Twenty-five years is my plan, at least. Beautiful. For what it's worth. I mean, this is like, Again, you know, America being the home of, you know, of entrepreneurship and kind of incentivizing capitalism, it's an amazing, like, you know, people push back against this kind of stuff because

they're like, oh, you should be paying your taxes. The flip side of that is this incentivizes a whole lot of people to go and build and to go and create jobs and, you know, and build businesses because you are going to get these advantages from doing it versus, you know, working in a salary job. So I think it's amazing. And it's like a very cool way that, you know, that builders and that people that are kind of compounding long term and doing things for the long term, to your point, the five plus year things you're not doing, you can't do this with like quick flip, you know, flip something, you know, in a year and hope to get the same tax advantage. It just incentivizes entrepreneurial long term thinking, which I just find to be a

really awesome thing. Now, it's a really smart policy. And it's, it has suffered some assaults by some small-minded people. So it's important we keep fighting for it. It almost got taken out in the buildback better bill, which was, but it, but it survived. Huh. So I know we're running up close to the end of time and we're going to have to do like a follow up episode on all of this because there's just, there's too much to cover in one session. What, like, maybe from each of you, it would just be great to like get some just general, either general closing thoughts on, you know, how listeners can kind of take away some of the

insights from what you guys are doing to, you know, to go and do this, like things you wish you knew, as it were. Or give us, like, one just, like, fascinating business or story that you've seen recently that is, you know, kind of capturing your attention. Sort of like Sceva's scaffolding story that he shared recently that drummed up a lot of interest on Twitter. I love that business, too. I still think about it, like on a weekly basis. So I'll give the advice because I get hit up a lot on Twitter DMs where people are saying, hey, I want to buy a business, like, what should I do? And I think the number one thing is honestly having a really honest conversation with yourself

and your spouse about like your readiness on a scale of one to 10 to do it because it absolutely can be a grind to run a business. And it's probably an intensity that if you've only worked in an office, you haven't fully experienced. because, and I've seen, I have seen people, you know, where businesses haven't gone well, really suffer and really grind for years and years. And that's not, you know, that's not what you want to see. But at the same time, it's, when you look at the risk return of going and buying a company and being in your own and being on the ownership side of the table, it's truly life-changing not only for you, but potentially for your children, your grandchildren. So the risk-reward trade-off is heavily in the reward favor.

But if you don't know how, if you never manage people, especially if you never manage blue-collar people, if you've never managed a P&L, it could make sense to go work in a small business and help them build it and make sure that that feels like what you want to do before you actually go try to buy one. I see some folks who are like 23 saying, I'm going to go on buy a landscaping company. And it's like, man, that could go horribly. arrive because you never manage people. So, you know, that was the gift that I think Siava and I both had is that we had,

we had done every job that you could do in business before we went and started buying them. And so even though we might not know something specific about plumbing, we do know if a business is working or not by looking at the financial statements and it's financial health as well as culturally and the team perspective and apply some heuristics to that. And so I think that that's that's the advice I would leave to people. But that doesn't scare you. Like you're you both are have experience in tech building tech businesses. Then all of a sudden you buy this plumbing business and you're in the plumbing business.

But you can't fix your own toilet. You know, like does that not scare you or are you that confident that you're going to hire the right people to manage it? and you'll be able to troubleshoot it. Yeah, it's a little article of faith. I mean, Betterwell Books was more of a logistics company than it was a tech business. So 300 people working in three warehouses around the globe and shipping an enormous amount of books here and there. So I think like just in terms of sort of managing a blue collar workforce, I probably got a little more exposure than most folks in the tech world. But the point is really well taken.

And it does, it's a little scarier for sure to buy a business you don't fully understand. And I think that's something we've really gone into is saying we need to really understand how this business makes money and where we would find the kind of people who know how to run this business. We don't need to be able to run it, but we need to be able to understand it if something goes wrong. And, you know, a business like scaffolding, you actually can understand a bit more simply than maybe some, you know, some indefinitely. industrial chemicals business where, you know, it's really, it's really sort of obscure and you don't know exactly what could go wrong. And I think we've seen that in our acquisitions, that the best businesses we bought have been at least somewhat in our circle of competence. And in a weird way, local plumbing and HVAC is as much about internet marketing as it is about getting to the toilet.

There is kind of like generalized knowledge versus specific knowledge in these businesses, too. And like you guys have incredible generalized knowledge and have probably been able to find, you know, patterns across all of these that apply. And then it's like, how do you retain the people that have the specialized knowledge that you really can't afford to lose? To Greg's point, like the people that if, you know, if they're gone and you lose their insights or their, you know, their kind of like institutional knowledge as a good way to say it, you're going to be in a lot of trouble. and then making sure you incentivize those people for the long run. Absolutely. Do you have a business, want to share one of our businesses we've seen? Yeah, I'm happy to.

And I think, you know, adding to some of the comments you were saying earlier, I also get DM'd quite a bit on Twitter from people that want to start hold coes or holding companies. And the main focus is identify your ongoing cash flow source. And that may mean buying a business, using SBA debt to buy something small that then generates cash flow for you so you can buy more businesses. Or in the world of the internet, you know, that may mean starting your own business, be a content creator, you know, create a course or whatever it is that allows you to build some ongoing cash flow engine, your own little version of the Berkshire textile mail,

because once you have that, you have unlimited opportunities to go out and buy more businesses. And that's really been our focus, at least in the early days of enduring. And then as far as like businesses that we love, you know, I'm a diehard for the blue collar businesses, the high cash flow generating companies. Recently, I actually posted a Twitter thread about a scaffolding business that we looked at in the Midwest. we ended up passing on it, but I can share some of the fun dynamics of that one. Scaffolding is an incredibly cool concept because if you think about it,

you're buying a bunch of equipment, right, all the different scaffolding pieces that you're renting out to general contractors. But once you buy that equipment, which can be really expensive, so that's a real barrier to entry, which is tough for new people, but great for people that already have the equipment. But once you have that equipment, let's say you have $10 million of scaffolding product, you can reuse that scaffolding equipment year after year for all of your contractors. And you really don't have to replace it too often.

You know, of course, there's some maintenance costs. There's going to be some amount of costs where you're buying the latest and greatest equipment. But your core business is this beautiful recurring revenue engine. And the one we looked at in the Midwest was doing about $4 million of EBITDA. We could have bought it at, what wasn't Xavier, maybe four times EBITDA? Yeah, I think four times, four times EVITDA. Yeah. And you know what?

You get paid to put up. You get paid to put up the scaffolding. You get paid a day rate well, it's up. So any construction delays just go in your favor. And then you get paid to take down the scaffolding. It's amazing. Yeah. And I mean, just to like the craziness of buying companies at four times EVDA, like in a world

where everybody was talking about, you know, 100x adjusted, you know, or like, you know, ARR in the venture world, you know, six months ago or something. Like, buying a business for four times cash flow, you know, EBITDA is a proxy for cash flow, is insane. Like, if you just do the math on, you know, I bought it for four times that, you know, and so it's going to generate, you know, and it generates its EBITDA with no growth in an unlevered world where I didn't use any debt. I bought it with all cash. I'm still generating a 25% return on that. And now I lever that, you know, with some debt and you're generating, you know, you generate like a 100% plus return if you, if you lever it effectively potentially in year one with no growth. It's like, it's completely

insane when you, when you think about the math of buying businesses at that price. I always thought, by the way, Siva, that like the best business in the world is those, the like dumpsters that get dropped at like construction sites and just sit there. You know, like at, even in like office parks and at, um, like apartment buildings, there's just like a dumpster that sits outside and they come and pick it up every now and then, but it just sits there and it has to be rented at like a pretty attractive rate. You never have to maintain those things because they're just like old dumpsters.

There's no like specialized equipment. No one's standing on them like scaffolding. Um, that has to be an unbelievable business. Yeah. I mean, we love anything where you can buy it once and just rent it over and over again. I think there's a franchise that's taken off, like maybe one of the fastest growing franchises right now. They're called junk crushers. I'm totally butchering it.

But basically they put that junk bin in front of your house. You put a bunch of stuff in it. And the only difference is that they have a machine that comes and compresses it in order to create more space for you. So it's much cheaper than the previous rendition where like maybe your chairs alone filled up to junk. And they're doing incredibly well. They're growing super fast and we certainly have our eye on them. Oh, that's a cool. That's a cool business.

You know, I think the ultimate god of the cash flow businesses is the smart card at the airport. You notice that thing where you pay $6 to get an airport cart? Yeah. I mean, whoever invented that to me is the all-time genius of cash flow businesses. Yeah. Yeah, that's probably right, actually. I'm actually curious now, now that you mentioned that, I want to dig into this now after. Like if anyone knows that's listening any of the mechanics of those businesses, I would love to learn more about that one. Because like, I mean, it used to be that there were people. It was like someone would come and you'd have to pay them and they'd kind of like hawk you down and, you know, you'd have to tip them or whatever it was for helping you. Like when I was a kid and that still exists in India actually. And then it became the coin operated, you know, dolly carts. And now it's credit card. Like I think you could pay with a credit card and get one of those. I haven't used one in years. But I wonder what they.

actual economics are of those things. Yeah, they must have a revenue share with the airport or something, but it's, it's, it, it like solves the airport problem because it makes it easier for people to load it onload. It, uh, you know, you pay six bucks when you get it. And you don't really care where the person leaves it, because either someone else will take it for, for, I think you return it, you get like a quarter or something. So there's like some incentive for people to just go walk around and return them. And then, uh, every once in a while, someone walks around the airport at the end of the night and then picks everything up. And there's no alternative. Like you just, you have to do it. Otherwise, you're not getting your bags. You know, if you have three screaming kids and you got all your big bags for your long

vacation to Hawaii, like, you're just paying the six bucks. You're paying. The, you know, like, there's no, there's no pricing discipline around that. All right. Well, guys, this was awesome. Absolutely blast. And I feel like I, um, I have like a hundred things that I learned and now a hundred more things that I need to spend more time learning, um, because you've opened my eyes a bunch of cool new stuff. So thank you both so much for joining. Where can people find you? I know you guys are both sharing a lot on Twitter. I believe it's at Xavier Helgeson. And we'll put in the show notes the spelling of your guys names because neither one of you has a particularly easy last name. And at Siava Kaczynski, both highly recommend following

because sharing some of the most interesting tactical insights that I've seen on Twitter. and what I think of as like real earned insights from things that you're doing actively on here. So super, super thankful for both of you coming on. Yeah, my biggest takeaway is thinking about the plumbing business as an internet marketing business. Like if you start thinking about all these services businesses as really just like internet, like 95% internet marketing, 5% like sort of old school utility, then that really changes your mindset on these things. And then you can just go one by one and look at all these different cash cow industries and see how you can play a role. So thanks for that. That's a great takeaway, Greg, because I think

you guys all know Nick Huber, the sweaty startup on Twitter, but he had a thing a while back that was like the best way to find business opportunities is to go to all of the local businesses in the niche that you're trying to operate in and look for the ones that still have a fax number. listed on their website or like don't have a website or the website's not optimized for mobile and you'll immediately identify opportunities because you'll be if you're thinking about you know opportunities to improve it and you know create more tech enablement um clearly anyone that still has a fax number on their on their page or or at their business is is not ready for uh for what the future looks like that's a truth i always like that honestly you can even it's Greg you can even sell leads you can start out

internet marketing and just sell leads to local plumbing companies and once you have the engine cranking then you can eventually go buy one. It's a really interesting strategy that I've seen before. And often that's the best way to start because you actually learn, you know, you learn the players that way. You learn the economics that way. So yeah, folks listening like get in the leads business and it's a fantastic business and a great way to learn. We should do an episode on that, Greg. We should do an episode on the leads business. I think there's a lot to dig into there. super interesting. Yeah, I've got some people there. Awesome. All right, guys. Well, thank you so much. Super appreciate it. Look forward to everyone that's listening, following you guys, and learning more

from you guys in the future. So thank you both. Thanks, guys. All right, thanks, guys.