The Startup Ideas Podcast - How Holdco Legend Michael Girdley is Playing Multi-Decade Games (and Winning)

Episode Date: September 7, 2023

Today Greg is joined by Michael Girdley--who's spent the last 30 years building a $100M+ holding company. In this episode, Greg and Michael talk about whether holding companies should take sexy VC money and how to be a decades-long player in a world of base hitters. ►►Subscribe to Greg's weekly newsletter for insights on community,creators and commerce.You'll also find out when new and exclusiveepisodes come out from Where it Happens. And it's totally free.https://latecheckout.substack.comFIND ME ON SOCIAL:Twitter: https://twitter.com/gregisenbergInstagram: https://instagram.com/gregisenberg/TikTok: https://tiktok.com/@gregisenbergaLINKS FOR THIS EPISODE:Production Team:https://www.bigoceanpodcasting.comMichael Girdleyhttps://twitter.com/girdleyhttps://girdley.com/SHOW NOTES:0:00 - Intro4:32 - Finding great businesses to buy7:22 - Does Michael think Greg made a mistake by turning down $30M?15:15 - Do this one thing before making a big decision25:27 - Scalepath, EverthingMarketplaces.com, Reforge and other companies doing communities right33:15 - The story behind Alamo Fireworks44:58 - How Michael Girdley is playing the long game

We're recording. Yeah, there we go. Michael Gurdley, Holdco legend. There's this new generation of hold co entrepreneurs, and you've been doing it for a while. Yep. Going on, second business I got into and really stepped out of my first one

was about a decade ago. So, been a while. So for folks who don't know you, can you just explain what you're performing? is looking like what you're up to. For sure, for sure. Well, today what I do is, well, I tweet a lot, evidently, but I own about a dozen different businesses here.

I'm located here in Texas in San Antonio. I grew up here, moved away for a while, but came back. My wife and I got back here 20 years ago now before we got married. And we've been here ever since. And so I have a diversified portfolio of companies. I try not to call it a portfolio because it makes me sound like a dushy PC, but I would consider those like deep and significant investments in companies I've either created or purchased. So there's everything from fireworks business. That was the very first business I got into and we still own that.

There is an education company. We started out. That was the first company I did outside of the fireworks business. And in the past five years, have really been an explosion of new businesses. I think I've honed down my ability to incubate companies. my model of how to do it and my understanding of how business works, those of all kind of come together. And over the past five years has really been the growth from two or three businesses up to up to the dozen where we're at today. And how do you think about incubating versus buying?

Incubating versus buying is a really interesting formula. For me, I think about it in terms of where I can find, you know, significant advantage. Right now, assets are super expensive and it's very expensive to buy businesses. So I, you know, I think when assets are expensive, you go create assets. And so really the past four years has been a lot more incubation for me and a lot less M&A. Which I feel like goes against what a lot of hold co-entrepreneurs are saying on Twitter, especially in like tech hold co-entrepreneur land. They're saying, you know, it's so hard to go from zero to one, go and buy a business. Are you seeing that too? People are saying they should go buy a business? Yes, because it makes it looks like it looks like you can skip that really annoying part of building a business, which is like when you feel

like things aren't going anywhere for the first like 18 months or so. At the same time, like if everybody's trying to go buy a new business, right, they're going to, prices are going to get pushed up. There's going to be a lot of competition going after the same assets and it's going to be harder for you. So yeah, you know, I think it's just one of those things for me. It's always like watching where the opportunity is then rushing to it. And if everybody's saying one thing, that's usually a sign you should be doing something different. Totally. Two to three times a day I get the pitch saying, do you know how many baby boomers are going to retire over the next few years? And they, you know how many businesses they run? These businesses are going to close down.

Absolutely. You can buy them for pennies on the dollar. Well, so, I mean, I think what people don't do is kind of like the, you know, the law of large numbers aspect to it where it's like, okay, well, why don't you go through and think about all these baby boomer businesses? And let's go over the first thing, which is businesses you just don't want to be in, right? Like, there's just like, okay, so that cuts out like all the gentlemen's clubs and like all the scummy stuff. So that knocks up a bunch of business that, you know, you're not going to be proud to tell people you want to be in at a cocktail party. And then there's like, okay, well, now let's knock out all the businesses that only really exist because something that goes home every night with the owner. That could be the owner's relationships, like the owners like knowledge, that could be the

owners, like credentials. And suddenly you look up and there's not that many businesses actually out there compared to the number of buyers who are out getting them. And then there's another problem on top of all that, which is a lot of these baby brewers have figured out something to do with their business already. They're going to sell it to a strategic or they're going to give it to their kids or they're hiring a manager. So, like, yeah, I know people are finding businesses from baby boomers, but like, I think that's kind of way overblown in terms of how many are truly out there.

It's not a tsunami. It's something more like a little ripple. This is how I would think about it. And when you do buy a business, how do you find great businesses to buy? Yeah. There's the, there's two will of ways that buying businesses tends to happen for people, including me. One is like the front door approach. Like, you just start doing what everybody else does, going through a list.

listings, learning about an industry, making phone calls, learning about them. That's what we do on our podcast, Acquisitions Anonymous, which of the five podcasts I've started, that's the one that has survived because it does well. And like, that's what we do. We go through listings and we look at a business each week, and then we talk about it and figure out if we would want to pursue it more. So, you know, like most of the M&A I participated in is software M&A because software is like, I know that a lot and I have a competitive advantage there.

It's much better for me to go buy something that I have a competitive advantage. into try to compete, you know, when I don't. So in the case of that, you know, there's the front doorway, which is just like looking at listings, going through the brokers and all that kind of stuff and seeing, you know, what the investment bankers and that sort of thing are pitching. That works. And you can sometimes find deals there. What I find is much more interesting as like the serendipitous approaches where it's like, you know, through your network, like the great deals always seem to have some weird way that they come into your, into your world. Like, It's a friend of a friend or your college buddy knows something going on.

It's some data that's not out there that everybody else can see. And that kind of inside information is where the most kind of interesting M&A opportunities happen. And most of the M&A I've done over the past four years has been through the company Dural Software that we set up. It's a really quickly growing company. They're up over 200 people or so global. And we've bought going on 15 companies now through that platform. And it's a hold code that is actually underneath my holdco.

So there's other shareholders there as well, but I founded the business and got it started that way. So I've participated in, you know, the underwriting of all those acquisitions those guys have done. So you raise money for that sub hold co? Yeah, we started it with our own money, me and the CEO. And then we did a couple of acquisitions and then we ran out of money. So then we brought on equity partners and some bank debt. And then it has grown since then. And then we brought on a professional investment group, a private equity firm called Peterson.

They agreed to invest in the company and took board seats and came in and put $50 million in the company about four months ago. So, you know, when it was clear, the opportunity was really big and required a lot of capital and we were going to run out of my capital, we brought in a partner there. And so I'm on the board with those folks. And so that's how that got structured. But we started it with our money and took it from there. You know, for as much as you can share, like, are you happy you did that? And the reason I ask is,

I haven't publicly said this, but we, like last week, we had an offer for about $30 million to invest in late checkout or holding company. And one of the top institutional investors, VCs, someone I really respect. He sits on two public company boards or two or three public company boards of some of like my favorite products. So I really respect him. but the idea of like giving up control and just having and maybe VC is different than PE but just having to prime it for an exit at some point made me a little uncomfortable so we ended up declining that I'm curious A are you happy with that situation and then B if you were me would you have taken that deal from that VC? Oh if I was you that's a great question um to

First of all, I'm a happy, totally delighted. Like, when we started to talk with Peterson, we asked around about their reputation and talk to references and all that kind of stuff. And it was fascinating even after we signed the deal that friends of mine, like college buddies, would be like, oh, I've worked with those guys. They're really great. And it turns out they are really great. And what I enjoy about them, and this is a cool anecdote, like they're from Utah.

So it's like a very family-oriented stuff. So it's not like, it's not like what I've described as New York private equity or Dallas private equity where they like show up and they're like, okay, show me how you're going to make me some money. Like these guys like, they were awesome. Like the first meeting, they're like, okay, well, welcome to the business meeting. First, I'd like to know about you. Tell me about your family. Like, and I was like, what is it going on here? Like, these guys are amazing.

And that was really like a cultural alignment with the company we've created like our number one core value is to make mom proud. Like literally, we have that written there. So it's like the nicest group of people ever. So it was a good fit there. And I think what is awesome is when you bring on growth equity from a private equity firm, like the good ones will go in and invest in adding value enough to where they earn their seat at the table. And like you like it's totally worth it. And so, you know, I think there's also besides that, which Peterson is doing, for me,

there's an understanding of my limitations currently. Like I've never really built a business bigger than where. Dura is currently. Like at a couple hundred people, like your mindset and your like small business habits really have to change, right? Like I've done a lot of like 30, 50, 100 person companies. Like I understand what that's like. And you can still kind of think and act like a small business person. But like as you start to get into the midsize company range, like your mindset and your habits have to change again. And so I knew when I looked around the table before Peterson came in, we were going to have to grow again as a board and also as a leadership team to meet the kind of

ambition that we had and the small business thinking and the habits that I had potentially, like I needed to grow. So frankly, like in those board meetings now, like I'm learning a lot just because they've been exposed to a lot of companies on the 200 to a thousand person kind of trajectory. And like that's new to me. Like in a small business, for example, you don't have to look really two or three quarters ahead to think about people problems, right? You could, you're fixing your people problems right now. But like at a midsize business, like you have to get ahead of the game to be ready or it'll stunt your growth, right? For example, you need to start planning ahead three or four quarters to say, okay, well, we need to have this person in as VP

of CorpDev or this person as a controller. Otherwise, the company, like, you can't look up and just change it on a dime because a little small company is like speedboat and like a midsize company is like more like a tanker, right? It takes like a couple quarters to change things. And so that's just like one example of like I knew Paul, who's my co-founder, like we just knew where we needed to learn and brought in some people who've done it already. And so anyway, just totally delighted by that decision. I think it's a win, win for like everybody involved and super happy I did it. Or we did it.

If you were in my seat, if you were in my seat, let's play this out. You're getting $30 million, you know, call it a $100 million post. We're doing quite well. We don't really need the capital, but the capital would help fund more acquisitions, like larger acquisitions than we might be willing to do. Right. But we're in software mostly, right? So, as you know, the cost of incubation isn't that high.

So if you were Michael Gurley, which you are, but you were playing my role, what would you do? I would really ask myself in that situation, like, if you look at your day and you ask yourself during your day based on what you do from get up to do podcasts to go to bed at night and how you describe that both to yourself and other people. How does that day look after you take that money? And is that going to be a happier day for you or a less happier day? And I think it's the first sign for me. Like, you know, I'd ask you right now, like in terms of your day to day, like what percentage of your hours are tap dancing to work hours and what percentage or not as fun.

I mean, I don't want to sound pompous or anything or like I'm gloating, but 95% of my day is tap dance. That's amazing. That is a much higher ratio than most people. You know, it's interesting. I talked to an entrepreneur last week who took a big slug of money like that for a VC back business. He's running it. And we did the same exercise in about 40% of his day was tap dancing to work.

But at the same time, once you take that VC money, I think that's the second. part of my question, like, what happens to your days then? Like, how tap dancing to work are you going to be after you take that money? You know, you know what I really love about my situation right now is there's no, I don't have a boss. Right. You know, like we, my take is that if you have investors, you have micro bosses. And you have to manage expectations and you have to manage up. And, you have to manage up. And, And sometimes subconsciously you're doing things that are, you're just trying to please them, even if it's subconsciously. Because a lot of time you respect them, you know, for example, this particular person,

maybe he says, you know, go acquire a marketplace. And even if I'm in that boardroom and I'm like, no, I think we should only be acquiring social networks for these reasons. And then, you know, a month later, I come across a marketplace and I'm like, oh, I'm trying to like fit it in his model. And then all of a sudden I'm like, I guess I'm working for him in some ways. So one thing I really like about my situation is we're self-funded. You know, me and my co-founder do whatever we want.

Yeah, it sounds like that's super important to you and would really reduce your like day-to-day happiness. So I don't know, based on that, like time is like the one thing we can't get back. eight and it's like why waste a minute of it on doing a life that really sounds like at its core is something that this VC wants you to live that life, right? And you have a different life that you want to live. So to me, if I was you and I did the same analysis, you know, I would, I would totally, you know, make that decision. Now, if I was Michael Gridley and I did things the way I do it, which is like, you know, it's scalable for me because I tend not to run things. And, you know, That sounds pretty exciting because I like interesting problems.

And it sounds like the 30 million on 100 posts would be like some pretty cool problems to go solve. And I think that would be fun. But it wouldn't change my life as much as it sounds like it would change yours. Whenever you have a fork in the road like this, I think that you should call smart people. Because actually, you could just call five people. They don't all need to be smart. They just need to be people that you respect. Yeah.

Did you lose my number or what happened? You didn't pick up. You didn't pick up. You were, you're too busy tap dancing to work or something. Yeah. Hey, this, you know, I don't have much reception here in this Chili's. Something like that. You know, one of the, one of the people I called, I'm not going to call him out, but he was like, I think you're making a really, really big mistake. And he was like concerned for me. He was like, I don't know why you're making this mistake. you can be so much bigger and you're not unlocking your potential. And with that $30 million,

like you could be public in two or three years. And I was like, have you spoken to public company CEOs lately? Like, they don't love, love it, you know? Obviously the liquidity is good, but he's like, well, it's not even just about that. It's about the problems. Same thing.

He's like, you'll be able to solve bigger problems. And I'm like, I don't know. I don't know about that. Because, you know, I think if you're a solo pinner, you're a multi-peneur, whatever, a lot of the times you're solving interesting problems. You're just standing on the shoulder of giants in terms of the technologies that you can, you know, be building upon, the audiences that you can create. And so I feel a challenge.

In fact, I feel more challenged today than I did running venture-back startups. Yeah, and I think there's a fundamental, I mean, When I listen to what your friend talk, I think there's a fundamental misconception a lot of people have, especially here in America, that bigger is always better, right? And it's like, it's our nature. And it's so ingrained in the way we think about things. Like, we don't even really, like, slow down and realize, like, it's all around us, right? Just like competition is such the core of American society. Like, nobody even really talks about how weird that is. Like, other countries don't act that way. And to me, when I see somebody like your advisor there, like, advice,

like, hey, you need to be bigger and better or it needs to be bigger, otherwise it's not better. Like, it's just a fundamentally flawed, like, worldview. On the other side of that, I think I really appreciate this advisor because when you call somebody like that, you really want them to, like, give you a strongly worded but loosely held opinion. And it sounds like he did, which sounds like exactly what you wanted because it helped you think about the issue better. Yeah. I mean, another person, another advisor I asked, he was the senior vice president of Corp Dev of a

$500 billion company. And he just said, I just texted him. I was like, what would you do? I could read you the text. Just full transparency here on the pod. He had texted me about something else and I was like, while I have you, if you were me and you were offered $30 million for your Holtco to fuel acquisitions for 20% of the business from a top institutional investor who sits on some board of some dope company.

companies, would you do it? And then I said, we currently generate X dollars of EBITDA. And then all of a sudden, he's just like, oh, so it's, you know, this amount of like, he was just calculating the multiples. He's like, well, if the multiple is this, then you should do it. And multiple is that, you know, you should do it. And I was thinking to myself, no, like, where's the multiple of fun, you know? Yeah. The multiple, where's the multiple of fun? Why is no one talking about the multiple fun. Yeah. Well, it's it's also this idea that nobody talks about is that there is a diminishing return on money. Like, and I also have this like weird idea I've been toying with that it's actually there's there's negative marginal returns on money as you get more of it. Like as I watch

people who are like super rich like super duper rich like G6 or whatever. What is the more expensive version of that? Like those people are actually all a very like they spend a lot of time like a protecting the money and be like trying to figure out who around them is not a faker and to me like you know i think i think being somewhat rich you know someday i'll get there right like that's the perfect thing rather than have to get more money and then you know you eventually get to a point real like jeff bezos where you're just like like he's just trapped in his fame and each additional dollar like that actually makes his life worse in my opinion so i think there's an inflection point it's somewhere around being able to afford flying private.

But, but, you know, it's like above that, I think the marginal utility of dollars, like, eventually turns negative. Yeah, there's a great framework for this. I think it's, you know, are you building a prison or are you building a castle? And I feel like not enough people take that framework when they're making big decisions like this. They oftentimes, they get so seduced by the vision of what would, you know, $30 million, $2 million, whatever it is, whatever that milestone is, they just, all humans, all of us, we kind of just like picture what it looks like when

that moment hits. Your company gets acquired, like all these milestones. And then it happens and you're like, hmm, am I in a prison right now? Yeah. I think it's totally true. Well, it reminds me, it floated around on Twitter last night. There's like a great Don Draper from Madman quote where he's like, he's given his speech about why people shouldn't pursue happiness.

And the reason they shouldn't pursue happiness is because when they get it, they want to go pursue more happiness. It's just like the most bizarre, like, approach to life, but also makes a ton of sense, given how Don Draper, like, grew up, like, dirt poor and all this kind of stuff and that's this really bizarre life view. But I mean, not to, you know, this is a spoiler alert for Mad Men. So block your ears for people listening. But the last minute of.

Mad Men. I don't know if you remember it, but it's Don Draper in Big Sur. I think he's at the S-L-N retreat center in like the 60s. And you just see him not wearing a suit, wearing maybe like a t-shirt tucked in. Like he's in casual wear. And he's looking off into the water on these beautiful California cliffs. And there's just this amazing freedom, like hippie 60s music that's playing. And you could just tell that Don Draper finally is happy. After all that,

after clawing through life and climbing up the ladder and selling agencies and like Madison Avenue. And, you know, and I think there's, I think that was one of the big lessons for Mad Men. So one of the reasons I wanted to talk to you is, you know, it looks like you're having a lot of fun. It looks like you're having a lot of fun. And you do things, I think, based on like your curiosity.

So, for example, you know, you created a course. When people think about creating courses, a lot of time it's like negative and, you know, people are like, why are you creating a course? No, you're just like, I'm curious about this and you created a course. Why did you create the course? What is it? And are you having fun doing it? Yeah. Look, creating a course is like writing a book.

It's not that much fun. It's a lot of work and it's never as good as you want it to be. That was the thing I definitely learned. I also learned a lot from doing the process. Like I did very much like a master class style course where it's just like, look, here's a lifetime of learning. I'm going to cram it in. Like the original script was like 450 pages.

just this enormous dump of like everything I feel like I've learned over 25 years in business. The reality is I think what I've learned since then is like people especially in like an attention starved or a focus starved world like now. Like the idea of like an 80 hour master class is probably not something like I would ever do again. Like I think people want stuff much more bite sized. And you're seeing like me sharing messages now. I wouldn't imagine starting another podcast, no offense to your podcast, but like the aperture of consumption for a potential podcast is like, is shrinking.

Like not only is people consuming less of them, but like the demand for people wanting 60 and 75 minute stuff. I think, you know, it's limited in terms of the options there for somebody like me. So I'm doing like a lot more shorts. Like I recorded like 20 video shorts yesterday. And I find those like super appealing because I just have to concisely put everything down. And I think anything I would do in the few. future around a course would be something much more manageable and short, like a two to three

hour thing very specifically around that stuff. And so for me, like the course is part of figuring out how to like there's this like idea that I want to grow my impact in terms of sharing messages and things I've learned and helping other people kind of figure out or get to the point where I feel like I'm like super happy. I want other people to be here. And like the course is like, how do I make the investments and feel good about it by monetizing the things I'm saying and then using that to reinvest in more content. So like I've hired like a whole team to do like social media. Like I have a CEO of it now. There's two of us. There's two of them plus me. And I'm trying to get it to a point where I just worry about teaching and messaging and then they just take care of

everything else. So the course was kind of the first bucket of that. And I think we'll do more of that in the future just because, well, those guys that I hired, they kind of want to get paid, which is important. And I don't want to come out of pocket paying them. So quick interruption from me. If you're listening to this on Apple Podcasts or Spotify, you're getting any value. You need to come to YouTube and subscribe to the Where It Happens podcast YouTube channel. I promise you the experience is richer, more interesting. So if you're getting any value, just stop what you're doing. open up the YouTube app, go to the website, and press subscribe at where it happens on YouTube.

And if you're watching this on YouTube and you haven't subscribed, what are you doing? Go press subscribe. Thank you. Enjoy the rest of the show. Another business that I find fascinating, just because I'm a community guy, is scale path that you incubated. Yeah. What we saw with scale path is we very much like. deployed the effectuation model that I used to build companies, which is like I went and looked at the

things that we have available to us, you know, in terms of our current resources and the change we could make on the world. And, you know, I saw that I've created a bit of a voice around small business operations, leadership, ownership, all that kind of stuff. So there's that level of trust that I felt like we could start with and use that to go build a business around. So using the associate model that I used to basically bring on entrepreneurial apprentices. Sam, who is the CEO of ScalePath, he and I, like, dug into that particular idea after going through three other ideas over the previous six months that all sucked. We dug into that idea, and Sam and I went and interviewed a bunch of potential customers.

And what we saw was in the small business space, like, there were a bunch of people that were, like, stuck in their business. They wanted to, like, grow both the business and themselves, but they didn't know how to, like, get past it. So we did like straight up like lean startup like interviews with them. Like what matters to you? What are your priorities? What are you solving for? And we heard like the same things over and over again. They're like, you know, I want to grow my business, but I don't have time to go to EO or Vistage and spend like a whole day doing that kind of stuff. And also they expect me to show up and know a bunch of things that I don't know already like how to hire people, how to fire, how to select a lawyer.

Like none of that. There's no class that teach you all that stuff unless you have a parent like I did who like teaches you how to do it. And so what Sam and I saw was there was this niche of people running these businesses, 500,000 to 5 million, wanted to grow, but there wasn't anything out there for them. And they didn't want like to go sign up for a marketing course. They wanted just like, tell me what to do. Give me a recipe on how to solve this problem that every business has. And so from that we went and like set up the business. And it's, you know, you pay a monthly fee. You join the CEO of your network. And the unique thing that we've done is create these playbooks that we're releasing now two per week.

And it's everything from like, how do I hire a lawyer to like, how do I fire someone to like, how do I do cash planning for my business? And you get, you come for that stuff and then you stay for the community. And we've built a community around that that's, I think, very vibrant now compared to a lot of other ones. I've been in super engaged. And it's going off really well. We're on month number five and adding new members like, you know, every couple days,

which to me is pretty exciting. Yeah, it reminds me in some ways similar to trends by the hustle. People came for some of these playbooks but then stayed for the community, although their community was on Facebook groups. Do you, yours sounds like it's more like Zoom discussions, maybe hosted by a moderator. Is that how it works? Interestingly enough, when people are in this kind of $500 to $5 million stage, like they're working in the business.

Like, they generally can't leave. So what they'll tell you is they want something asynchronous. So we're all Slack-centric. And then what Sam does, and I'm part of this, is we'll have a couple of synchronous events per week. And those could be things like we'll bring in an expert who wants to talk about, like, you know, how audits work. And like, that'll be that particular thing. Or a Q&A around one of the playbooks. We'll do that as well.

And he's built up a roster of these experts. There's like a sales one. and then we have one around banking. There are all kinds of folks that he's brought into this network now. So it's mostly asynchronous, but then there's the synchronous aspect of it as well as how we do it. And it's all Slack-centric Slack and basically we use an online portal for the actual playbooks themselves.

And so far it's worked really well. Have you heard of everythingmarketplaces.com? No. So if you go to their website, I'm not involved or anything like that. I just find it. They did a great job. It says, we're community for marketplace, founders, and leaders. So first of all, you would think that is like super niche. And it is, but first let me explain the product. So basically the way it works is you get access to this community. They have events. They have a knowledge hub and resources.

So I'm sure some playbook type stuff. And just different guides, tutorials, toolkits, investor database. like who are the most active marketplace investors. And they've got 1,800 people. I had heard that, you know, they're in the seven figure revenue range, which is really amazing. And I think it was came out of a venture studio where they were working on multiple products,

but this was working so well. The team was just like, let's just focus on everything, marketplaces. It's like every venture studio does that. Yeah. So I feel like this model that people like you and everything marketplaces are pioneering is only going to get more and more popular.

Yeah. And look, we, I don't know if you're familiar with Reforge, like, and what that does for like, you know, tech continuing edge, like, or Ed. You know, what Scale Path really wants to be is Reforge for small business. Like, that's what we're planning on doing. So we've got a good chance to get in there. I'm excited about it. How does, how does Reforge work? I think you end up showing up and buying like it's the $2,000.

Last I saw it was the $2,000 a year and you get like a level of basic stuff. And then I think there's some add-on courses that you can pay on top of that. So basically they've optimized everything for most employees have a $2,000 educational budget and they like you, Solomon. Right. They've raised money from Andrewson Horowitz and all that kind of stuff. That's their first mistake. Yeah, I mean, I would have just not raised money. But this artifacts piece that they're doing is really cool.

So they have like, you could, you know, this is really cool. So they basically list out, you know, board survey at carry first, user interview cards at Sittley, holy Trinity of dev team planning at fractal. So they're basically getting all these product one page brief at Brilliant Smart Home. So they're getting all these assets from these companies. and they're just, you can just download them. Yeah, so the pricing is $2,000 for a person. You get one seat and you get to join one cohort.

And then they have corporate plans on top of that. Interesting. Yeah, I mean, great, great business. This looks really smart and probably producing a ton of value for folks. I just don't know if they, I would have raised money for this business. Yeah. Well, like you, it's like, do you want to own 100% of a great business or do you want to own 40% of a great business?

And I think there's this interesting category of ideas and it's a lot of your businesses too that don't need a lot of capital to grow quickly and you know, marketplaces, communities, to some extent, agencies, if you can get in the right niche, like they all check that bucket. And to me, like, that's the other thing I've learned over the past 15 years. Like, I don't really want to be in a bunch more heavy Kappex businesses because it turns out they eat up all your capital, which totally sucks. Was the fireworks business that you started or you're involved?

I mean, tell the story about, I think it's Alamo fireworks. How did you get involved in the firewood business? It's the one thing that doesn't look like everything else. So yeah, so I got in the fireworks business. I'm actually the fourth generation girdling in the fireworks business. Fifth, if you count my, you know, by marriage. So my great, great, great uncle sold fireworks door to door with a hand cart in Kansas back on the 20s. And then my grandfather came back from the war and the war being World War II.

He was in the Navy in the Pacific. He and his wife, my grandmother, moved down to San Antonio because they wanted a slower pace of life. And that is San Antonio. It is a slower place of life place. It is the anti-Miammy. Let's put it that way. And so they got into the wholesale. in retailing of fireworks. My grandfather was the first person to import fireworks directly from China

into Texas. So that was a pretty cool aspect of that. And then my dad joined the business in the 70s. He grew it significantly from just a handful of retail locations to much bigger, well, you know, well under the hundreds. And then my brother and I got involved in the 2000s. I was the CEO for eight years. And that is a very difficult business to run. It's super high complexity, very difficult for a lot of reasons. And the business is where it is now today were 37 stores around Texas, hundreds of locations that are temporary, pretty significant, you know, amongst the top two or three vendors in the state.

So I got involved in it because my dad wanted to retire. He, you know, recruited my brother and I to come in and, you know, I got an entrepreneurship the old-fashioned way. Daddy. So. And he didn't want to sell the business. He wanted to share it with his children. He had flirted with

selling it but I think ultimately it was a win-win for everybody I got to come back from California I got to live I think a really good life my wife and I are super happy here and you know he got to stay

involved he's significantly involved in the business he's a landlord for us and yeah if you can figure out how to do family business with family I think it's like a superpower for the family you get to really have, you know, some interactions that normally don't have.

The danger is family businesses have a way of, like, exploding families. So you really have to be careful and navigate the whole thing. So, you know, we spend a lot of effort trying to communicate well as a family, get along well, be transparent, open, and that's the way to make a family business work. Was the exploding families line there a fireworks pun or were you just? Yeah, no, I've heard them all. You know, that's an explosive business. sales must be skyrocketing, you know, on and on and on since I was a kid.

So, yeah. What's something you love about that business and what's something that you don't like about that business? Believe it or not, the consumer dynamics create real interesting modes for a retailer that often other retailers don't have. You know, we have brand affinity with people, but also just the customer dynamic. They all mostly shop on a couple days a year. So that creates opportunities.

If you own real estate, you know, in the right places, you could potentially do really well for your life. You know, and it puts food on the tables for, you know, multiple gurdly family members. And it's easy to forget as the business grows that ultimately the business needs to switch to serving you. And I think the business that, you know, that business taught me that lesson of like, oh, okay, like at a certain point, like this business exists to serve me, the owner rather than for me to service it.

And things that I don't like, you know, like. look, it's much more fun to be in businesses that, like, fire officials and police officers and public officials, like, want to have a round. Like, the first business I started that that wasn't fireworks, like, like, the fire inspector came in and he was like, hey, like, okay, well, you guys are pretty close. Like, you're, you're past. Like, just call me when you fix that one thing. You're open. And I was like, what is this? Like, these guys were never this nice when we were selling fireworks. And it's because they just, you know, they had this attitude that just wasn't as nice. So, you know, It taught me that the thing that matters most in business is not how well I run a business.

It is what game am I playing? Like, I would much rather play a really good game and be in a super good business and do that not very good than to be the best at a really hard business. And I would rather just, at this point in life, I just want to play easy games and definitely be in that business taught me that. I feel like Dura Software is a very good business to be in. Like the business of buying hyper-niche software, I mean, Constellation Software, I've been following them for the last five or so years and it's such a great business. What do you think of Constellation Software? Have you spent much time just looking at what they're up to?

Tons of time. I mean, there is a thesis right now that there are going to be a lot more consolation style, you know, hold codes and roll-ups happening, especially ones that are just holding for yield. rather than for appreciation, right? Which is what like what Dura does, right? Like we're cash flow buyers. And so like I think Constellation and Mark Leonard and the things that those guys have invented and then the level they've taken it to like is just ungodly. Like like most people don't understand the level of just what Mark Leonard and his team, Mark Leonard is a CEO and founder of it, former VC.

What they've done through like 25 years of just inward focus of like how do we optimise? every part of like learning and feedback and the acquisition model and keeping track of potential acquisitions and like organizing it and then all of that like they just do it at such a high level compared to the smaller aggregators of which were one right and someday we want to get there but like for example their feedback process of how they do post acquisition like you know reflection to do better for the next one is like over the top like it's just like standardized beautiful data centric just like all the stuff you want And that's because Mark is really smart.

He's not in there trying to run those companies. He's in there trying to do two things, which is, you know, manage the culture of that business and have the right learning culture there. And then second, create the systems around that to facilitate that learning culture. And so holding everybody accountable around that, just, I mean, just the dude's like a super genius. Like when I look at it, I'm like, okay, that guy is really, really good. Like someday, someday I want to get that good. And we'll see.

He's been doing it for 25 years. We've been doing it for five. You know, we've got a long way to go. And I'm optimistic. Could you explain just like what they do for folks who don't know much about consolation software and just a primer on what do you need to know if you're interested in building a mini consolation? So what Constellation realized when they first got started is there's two types of software.

There's vertical software, which is software that goes towards a specific industry. So it might go to like the pet care industry or it might go to the insurance industry. And then there's horizontal software. And horizontal software is stuff like Microsoft Word, like it sells across every single industry. And what Constellation realized early on is that this vertical market software was super powerful. You could go buy this stuff. You immediately had pricing power. You had durable revenue.

Like, you could generate cash. You didn't have to reinvest in the business really to grow it. Like, these are all beautiful things. So what they did instead of trying to write and create vertical market software was they went out and started acquiring these companies. And he raised $25 million from, was it was a good thing. Calpers. It was omars or whatever the Ontario pension fund. Omer's. Yeah. Omer's. Yeah. And so that's how they got started. They kept doing that compounding buying. It was relatively slow for the first 10 years. And then the

snowball kept going because they would take the cash from these acquisitions and go use that to buy more companies. And eventually they're where they are today, which I haven't even looked at the market cap recently, but it's probably close to $100 billion. They're generating just tons of cash. And now they've just turned into a giant vacuum cleaner that just goes around the world buying software everywhere from North America, Canada, Europe, Australia. They have all these divisions and they've segregated them into vertical market groups depending upon the vertical that they're going after. And it's just turned into this really beautiful kind of cash generation machine that is, it does this at scale. And I think I don't even know the exact number, but I think they acquired like a billion dollars in revenue last year. I mean, just something, just they did an acquisition like every day, like just ungodly.

And they're doing them all like, you know, mostly small, 10, 5, 10 million in revenue with some bigger chunks, but like just create a crazy velocity. And it's turned to this giant behemoth all done out of Toronto. If you look at their stock chart, it's literally up into the right. They're at an all-time high. Their stock is up just about 10,000 percent since 2009. 10,000 percent. Real stocks are up 50,000 percent. Yeah, exactly. Come on. Come on, Mark. Come on, Leonard. Get back to work, buddy. He's also like an epic looking guy, right?

Yeah. Have you ever met him or no? No. Not all Canadians know each other, Gurdily. Yeah, I thought you guys just hung out out of the Tim Hortons. Yeah, he's got like this. So Mark Lennon is like this very reclusive guy. He rarely goes into the public. And part of the reason is, A, I think he doesn't like it, but B, you can see in his shareholder letters, he got sick of going and telling people how to do stuff in public. And then they would copy him and compete with them. And he did not appreciate that. So he doesn't do hardly any interviews anymore.

And the ones that you see are like few and far between. It'll be like some grainy cell phone camera where he's like taken in a room. And yeah, so he's like a reclusive guy. He refused to fly anything but economy class until recently. he's also like my size in terms of height and also like much wider like I think yeah it weighs me by like 50 or 60 pounds and then the best part is he has like this giant Gandalf the wizard beard and it just makes him seem like he's just like an oracle like a sage like he's rich imagine Rick Rubin but he's doing software that's what you end up with exactly yeah he's a Rick Rubin meets Gandalf software Canadian look guy so he's you love to see that you know his is he's got a crazy looking vibe about him. And sometimes you need that. I mean, when he decided what, you know, when he started consolation, what he was doing was

crazy, right? Like, it was definitely against the grain. So, and I love that he declined, like, he's declining media interviews. He's, he's, you know, he's a clues, you know, he's an interesting character. I think he is, I think Mark is a perfect example of the power you get from Manan. focus for decades at a time. Like I think, you know, I think we keep talking about this issue. You and I've talked about it on Twitter a lot. Like, you know, are you willing to go do something for decades at a time? And if you're willing to do that, like, you're basically unstoppable because 99.9%

of the planet is totally incapable of investing more than a couple hours and something. And if you can do it for a couple of decades, like you're guaranteed to win. And like, I think that's, that's the biggest takeaway for me watching Mark is like, oh, if I'm going to do something, like I want to play multi-decade games. I don't want to play like multi-year games. Not as much fun. So what's the, this is a good place to end. What is the multi-decade plan for Michael Gerley and companies? There's two answers for you, which is like I'm getting ready to turn 49 and I don't think I haven't figured out. Like I went on a retreat like last week and like they asked my two issues where I was like, oh, I'm figuring out this media thing and like I'm trying

to figure out what my life's going to look like, you know, 15 to 18 years from now when I'm in my late 60s. And frankly, I just don't really know. Like, I haven't figured it out. And that's one of the things I started last year, just kind of thinking about what do I want my life to look like? Where am I going to be, you know, am I traveling around? Who am I with? What am I working on? What risk profile do I have? What are, you know, what is my interaction model with my kids and all that kind of stuff? Like, what does that look like? I just, I'll be totally straightforward with you. Like, I don't know. Like I got to spend the next year or so kind of figuring out because that that 20 year thing is it seems soon, right? I'm 48 and 68 will be here soon.

You know, in terms of the business plan, the business plan is doing more of exactly what I'm doing. Like I am, you know, working with the companies that I'm already in, you know, I hate to use the word portfolio, but it's the portfolio and I'm working on it. And they're growing and they're going to, I think we're going to have 100% success right there. But I think, you know, the thing I want to work on for the next 10 years is creating. more huge ideas where that's buying companies, where that's creating companies that buy more companies, or whether it's incubating things like scale path, you know,

or our staffing company near that are going to turn into, you know, big impactful things. Like, I only want to work on that stuff. Like, I don't want to launch anything that's small. I only want to do stuff that I think is going to change the world

and get really big someday at this point. And maybe that's just a factor of being almost 50. Like, I see the end is coming. And I'm just going to do more of that. And I love that because, it makes my life like so much easier like I just say no to so much stuff now because I'm like I'm just doing that and otherwise I say no and yeah it gives me a lot of peace going back to the I don't know

answer that you have for yourself I think there's so many of us who don't know what they want to be doing in 5 10 15 20 years how do you how do you turn question marks into periods and answer some of those hard questions. Yeah, for me, for me, I take time to make really difficult decisions like that. And I gather a lot of data. I think about them a lot, lots of long walks and that sort of thing. And then I talked to smart people like you did to get their opinion on it. So I'm in CEO peer groups. I put it out there that I'm still thinking about it. I guarantee I'm going to get some messages with input on it. I'll probably talk about it on Twitter at some point. That was the best thing I did this week, actually. I just, you know, I put some advice that I had gotten from other people out on

ask for other people's opinions. It makes for great content, but it also, like, helps me figure stuff out. And so over the coming months, like, I think I'll develop a vision of where I want to be, you know, 20 years from now, which that's what I think I haven't figured out. And then once I figure that out, it'll be straightforward. I'll just make a plan on how to get there. But right now it's data gathering. Data gathering will turn into really listening to what my soul says I need to be doing 20 years from now, paint a vision of that and then figure out a plan. So that's really a three-step process. Says easy does hard is what I would say about that process though. I like it. And last thing before we leave, what's this what's this chili thing? Like where where does this connection with

chilies come from? And basically for the folks who don't know, Michael Girdley's a must follow on Twitter. But just so you know, you're getting 10 or 15% of his tweets to be chili. Chili's related tweets. I need a cut down on. Look, for me, for me, I have some views of the world that I think are important. And Chili's like, yeah, it's kind of goofy and I'm a pretty goofy guy and I'm happy to be out there as a goofy guy. But I think also there's this idea of how I feel about Chili's that is how I kind of feel about the part of America that I live in. And I think America, to some extent, is so focused on a number of things.

But one of them is like, I've always felt kind of a resentment to thinking that, you know, this idea that everything has to be special. It has to be like a Michelin star to be beautiful, right? Or it has to be handcrafted in downtown L.A. for it to be great, right? Or it has to be this extreme thing. And, you know, are you got to go to Burning Man to find peace? Like that to me is just like, you know, there's joy to be found in many places. And I think all those things are beautiful.

and I think all those things are great. But when I think about Chili's or I joke about it, it's really that feeling. Like if I go into a Chili's, like there are people who are nowhere near Twitter, nowhere near the world you and I live in, and they're just there with their family, like enjoying a beer or like relaxing over lunch

or spending time with a colleague after hours. And to me, like just normal people and fly over America, like just living life where it's, yeah, it's easy. It's the same every place you go into. I think there's just as much. beauty in that as you find in you know a Brooklyn you know a Brooklyn canary right or an LA kind of club scene that is the one place in the world that only people get into like I think there's beauty throughout all of that and it all comes down to for me like you know making sure you

take a moment to slow down and find that beauty because even though it's uniform and every single Chili's looks the same just like every single exit off of American interstate like I find I find it beautiful that people are able to be special and human and connect with each other in a place like that and do it easily in a way that works for them. So that's when you see me joking about Chili's, that's what I'm actually thinking in my heart. I'm like, man, like all those coastal people hate this, but like there's beauty here and they're just missing it. I love it. And I also think that in a world where especially on on X Twitter, so much the content feels like chat GPT, Like whenever I see you tweet about Chili's, I'm like, whew, at least he's...

It's your blackback guy. No, no, no, no, I'm kind of like, I'm kind of like, all right, all right. This is not AI content right here. I know that, you know, this is human. This is Michael Gurley behind this account. So for me, it's like a verification that you... Yeah. Yeah.

And to be honest, it makes me feel as a audience member, like more connected to. to you. And, you know, I really, I feel like I understand you more from, from those quirks. So I think people should be more quirky on places like X. I think it's, I for people that are in my generation, Generation X, like I go talk to all my friends and I'm going to write it, I'm going to write a front about this about how like there's such an empty gap where like if you would actually be one of the people in their 40s or 50s who's learned some stuff and it's like, willing to put yourself out there and be a little bit vulnerable. Like, it is such a blue ocean for us. us. Like, like, we have such an opportunity to share and connect. And that's what happened. That's

how I think about social media. But like, my friends are terrified. They're like, well, what if I say something stupid? I'm like, well, then you apologize. It's pretty straightforward. That's just like real life. And like, I think there's such an opportunity there to go and be a real person, just because nobody else in my generation is capable of doing it. Like, we just, we're just wired to keep our mouth shut because, you know, I don't know why. Maybe the boomers told us we had to do it. But like, I think it's such an opportunity. And, um, Anyway, I don't know. I wish more.

Well, actually, no, more people should not do it because it would be harder for me. So, yeah. Where could people follow you for more Chili's and Holdko and business related content? I don't know if I told you, Greg, but I'm a YouTuber now. So you can go to my YouTube channel. I am working hard to get good at video. It is very humbling. We've recorded 10 things and I've thrown away half of them.

So you can search on anywhere on Google, Gurdley, will give you to my website, or you can go on YouTube to Gerdley World, or I'm at Gurdley, Girdley, G-I-D-L-E-Y on Twitter slash X. And yeah, I appreciate the opportunity to promote myself a little bit. Of course. I just gave you a subscribe and people should do the same. Also, if you're listening to this, just subscribe to him right now. Open up your YouTube app. Go to the website. He told you what to do. And if you aren't subscribed to at Greg Eisenberg on YouTube, well, that's crazy.

So do that while you're subscribing to Michael Gurdley. Thanks so much for joining. You've got to come back again sometime. And people, please, if you're listening to this and you made it to the deep end, let us know what you thought of this episode on Twitter X, whatever you want to call it, and on YouTube.