Back from the Brink: When Everybody Quits Day 1

Summary

Acquiring Minds: Episode Summary – "Back from the Brink: When Everybody Quits Day 1"

Release Date: February 24, 2025

Host: Will Smith
Guest: Jack Carr, Owner of Rapid Response Heating and Cooling, Brentwood, Tennessee

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Introduction

In this riveting episode of Acquiring Minds, Will Smith welcomes Jack Carr, an exemplary acquisition entrepreneur who turned a precarious business takeover into a thriving enterprise. The conversation delves deep into Jack's journey of acquiring a struggling H Vac (Heating, Ventilation, and Air Conditioning) business, overcoming immediate setbacks, and scaling the company to impressive heights within a short span.

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Jack Carr’s Entrepreneurial Journey

Jack Carr's path to acquisition entrepreneurship is marked by diverse ventures and significant learning experiences. Prior to purchasing Rapid Response Heating and Cooling, Jack ventured into various industries, including:

• Wine Industry: Jack served as the Director of Operations for a portfolio of wineries in Napa, California. Despite enjoying his role, the industry’s limitations for family growth prompted a career shift.

• Real Estate and Startups: He explored real estate, launched his own wine brand (which eventually failed), and successfully exited a mobile repair shop venture with a modest six-figure gain.

• Bitcoin Mining: Jack found his big break in the Bitcoin mining sector, running a server farm from 2016 to 2020. The successful sale of this business provided the necessary liquidity for his next entrepreneurial move.

[06:54] Jack Carr: "I've always had an entrepreneurial spirit... My big break was starting a bitcoin mining server farm... sold it as the market peaked and took some time off to figure out what to do next."

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The Acquisition of Rapid Response Heating and Cooling

In June 2022, Jack acquired Rapid Response, a small H Vac business in Nashville, Tennessee. He identified the industry as a strategic choice due to its technical complexity and growth potential.

[11:34] Jack Carr: "The 0 to 1 is extremely difficult... H Vac was something I had to figure out myself, and that complexity serves as a moat for the business."

Key Factors in Choosing H Vac

1. Technical Moat: Jack recognized that refrigeration theory, a core component of H Vac systems, is complex and not easily replicable, providing a competitive edge.

2. Market Tailwinds: He targeted rapidly growing markets like Nashville, Austin, Florida, and Charlotte to ensure ample opportunities for expansion and market share acquisition.

3. Operational Challenges: Understanding that smaller businesses may lack robust systems, Jack aimed to implement strong operational frameworks to drive growth.

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Day One Crisis: Employees Quit

The acquisition did not go as smoothly as planned. On his first day, Jack faced a critical setback when all technicians quit, leaving him with just a part-time dispatcher.

[35:26] Jack Carr: "The owner let slip to the warehouse that he was selling. The technicians didn’t know me and were scared of changes, so they all quit, leaving me to run calls solo on day one."

Jack’s Response: Becoming a Technician

Faced with the sudden exodus, Jack took immediate action by stepping into the role of an H Vac technician himself. This hands-on approach was pivotal in maintaining operations and understanding the technical intricacies of the business.

[40:50] Jack Carr: "I had to figure out this for myself... It was a sink or swim moment, and I chose to swim by putting in the work and hours."

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Building the Business Back: Growth Strategies

Over the next two and a half years, Jack transformed Rapid Response from a fledgling operation into a robust company with 17 employees and $3 million in revenue by the end of 2024, setting sights on $4-5 million by the end of 2025.

Key Growth Tactics:

1. Customer Retention and Acquisition:

   • Book of Business Acquisition: Jack strategically purchased additional books of business, valuing them based on a 50% retention buffer from the previous owner's customer base.
   • Proactive Outreach: Utilizing voicemail recordings from former owners and multi-channel communication (texts, emails, mailers) to retain existing customers and attract new ones.

   [61:05] Jack Carr: "We take their last three years of customer base and pay for 50% of that as a buffer against attrition."

2. Digital Marketing and Online Presence:

   • Google My Business (GMB): Jack emphasized the importance of managing and expanding GMB profiles to enhance online visibility and attract local customers.
   • Customer Reviews: Building a substantial number of positive reviews to improve SEO and establish trust with potential clients.

   [78:26] Jack Carr: "Reviews are never going away. They are crucial in telling Google you're a good company and should be recommended to others."

3. Operational Excellence:

   • System Implementation: Establishing robust systems for dispatching, marketing, and customer relationship management (CRM) to streamline operations.
   • Hiring and Training: Gradually building a competent team to handle various facets of the business, ensuring sustainable growth.

4. Community and Networking:

   • Mastermind Groups: Joining and actively participating in industry-specific communities to gain insights, share experiences, and receive support from fellow business owners.

   [73:25] Jack Carr: "Surrounding yourself with these people is what helps you. It's something you never figure out all on your own."

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Key Lessons and Takeaways

Jack Carr's experiences offer invaluable lessons for aspiring acquisition entrepreneurs:

1. Thorough Due Diligence:

   • Ensure the business you’re acquiring has solid systems, processes, and a reliable book of business.
   • Understand the value of the existing customer base and implement strategies to retain them effectively.

2. Adaptability and Learning:

   • Be prepared to wear multiple hats, especially in the initial stages of ownership.
   • Continuously educate yourself on the technical and operational aspects of the business.

3. Strategic Growth:

   • Leverage operational efficiencies and digital marketing to scale the business.
   • Explore opportunities to acquire additional businesses to fuel exponential growth.

4. Community Engagement:

   • Engage with industry peers and join mastermind groups to enhance your knowledge and network.
   • Learning from others’ successes and failures accelerates your own growth trajectory.

5. Resilience and Leadership:

   • Face challenges head-on with determination and a proactive mindset.
   • Establish yourself as the leader, making informed decisions without being swayed by employee apprehensions.

   [32:31] Jack Carr: "Make sure to buy a business that already has what you don't have... Use leadership and solid facts to grow your business."

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Conclusion

Jack Carr’s story is a testament to the transformative power of acquisition entrepreneurship. By navigating unforeseen challenges with resilience, implementing strategic growth tactics, and leveraging community support, Jack rebuilt Rapid Response Heating and Cooling into a thriving enterprise. His insights offer a blueprint for acquisition entrepreneurs aiming to turn potential pitfalls into stepping stones for success.

Notable Quotes:

• Jack Carr on H Vac Complexity:
  "[16:27] Jack Carr: 'Refrigeration theory is different in itself. It’s a really difficult thing that builds a nice moat around your business.'"

• On Overcoming Day One Crisis:
  "[35:26] Jack Carr: 'All the technicians quit, leaving me to run calls solo on day one.'"

• On Importance of Google Reviews:
  "[78:26] Jack Carr: 'Reviews are never going away. They are crucial in telling Google you're a good company and should be recommended to others.'"

• On Community Support:
  "[73:25] Jack Carr: 'Surrounding yourself with these people is what helps you. It's something you never figure out all on your own.'"

Contact and Further Resources:

• Jack Carr’s Twitter: @HVacJack
• Rapid Response Heating and Cooling: RapidResponseHVAC.com
• Jack Carr’s Podcast: Available on major platforms including YouTube, Spotify, and Apple Podcasts.

For more insights and detailed strategies on acquisition entrepreneurship, subscribe to Acquiring Minds and sign up for episode summaries at acquiringminds.co.

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This summary provides a comprehensive overview of the episode, capturing the essence of Jack Carr's entrepreneurial journey, the challenges faced, strategies employed, and the pivotal lessons learned. It is designed to inform and inspire listeners, offering actionable insights for those interested in acquisition entrepreneurship.

Transcript

[Will Smith]

I've been seeing the phrase high agency on Twitter lately how thanks to AI, there's never been a better time to be a high agency person. Well, I suppose it's stating the obvious to say that acquisition entrepreneurs are high agency, buying an existing business to lead it and build it further. If that's not grabbing life by the horns, I don't know what is. The well, today's guest Jack Carr sees your high agency and raises you. He bought a small H Vac business, really too small by his own admission. He calls businesses like these a buyer's trap. And on the very first day of his ownership, all the technicians quit, leaving just him and the part time dispatcher. What to do? Become an H Vac technician himself of course, which he did and it worked. We spend lots of time on how he pulled it off. Two and a half years later the business is 17 employees and did 3 million in 2024 revenue. Jack's targeting a run rate of 4 to 5 million by the end of this year 2025. One more thing to call out Jack's enthusiasm for ETA, even having gone through what he did in essentially buying a shell of a tiny company. That shell had a ringing phone, a Google My business page and customers. And that made all the difference. Enjoy this wild story with Jack Carr, owner of Rapid Response Heating and Cooling in Brentwood, Tennessee. Announcements A webinar this Wednesday as you know, transitioning a business is a delicate and high stakes process for any searcher. Come learn best practices from Chelsea Wood including employee retention, culture, management, the Day one speech and communication tools. This is also an office hour, so come with your questions. That's this Wednesday, February 26th at noon Eastern. Register at the link in today's show notes or on the Acquiring Minds homepage. Acquiring Minds code Also M and A Launchpad is back for its Spring show. You'll recall that M and A Launchpad is a one day event that brings together searchers and independent sponsors, seasoned business buyers, owners and private equity investors to go deep on buying businesses, finding financing and closing acquisitions, meeting investors and lenders, learning value creation from those who have done it. These are just a sample of the workshops and panels that are packed into a very full day and that day is May 3rd. The show is in Houston. The organizers are running a promotion just for US$200. Off with the code acquiring minds. Go to malaunchpad.com and use the code acquiring minds. All one word or use the link you'll find in today's show notes. And finally, in case you missed it. Last week my partners in Minds Capital and I launched a new podcast called Meeting of the Minds, a weekly show focused on independent sponsors. Now as you know, the independent sponsor format of buying businesses is quite different than that of search larger businesses, much more outside capital, stricter expectation of an exit by investors. You can think of it as an entrepreneur doing private equity, but deal by deal, not by raising a fund. And for many searchers, it's where their business buying careers might take them. Being an independent sponsor is actually doing more of what they like deals and strategy and less of doing what they might want to move beyond operations and the hand to hand combat of being an owner operator. So come learn about another model of business buying and the stories behind the entrepreneurs doing it. It's called Meeting of the Minds. It's every Wednesday. Please join us on YouTube, Spotify, Apple, everywhere. You get your podcasts. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. You know that one of the most common levers to pull in a target acquisition is technology updating the systems of a business that may still be running off a spreadsheet or even pen and paper. But tech is complicated with tons of solutions out there. So choosing the right cloud platform, CRM, telephony, compliance and cybersecurity, not to mention implementing all that, is a job in itself. Acquiring Minds Guest Nick Akers knows this firsthand. As a former searcher who now owns Inso Technologies, Nick has seen the tech challenges searchers face when acquiring businesses. His team at Inzo regularly works with searchers and their acquisitions, offering a complimentary IT audit of the target company. Nick takes a personal interest in all their searcher clients, drawing from his own experience in the search phase. Enzo dates back to 1989. So this is a company that has managed the tech for hundreds of small businesses over decades. And one last thing, no long term contracts with Enzo, a big differentiator. Check out enzotechnologies.com inzo or email Nick directly at nicknzotechnologies.com and don't forget to tell them you're a searcher. Jack Carr, welcome to Acquiring Minds.

[Jack Carr]

Hey Will, how's it going? Good man, really excited to be here. Really excited.

[Will Smith]

Jack, you bought an H Vac business in Nashville and the worst case scenario happened. Essentially all of your employees quit on day one. But in two years time you've built the business back and then some. You ended last year 2024. Four times larger in terms of revenue than the business was when you bought it. What a ride. Let's get into it. Start us off, Jack. How did you initially decide that you wanted to buy a business?

[Jack Carr]

Oh, goodness. So doesn't go back too far. I've always had an entrepreneurial spirit. I was working in the wine industry, Napa, California, for kind of my whole W2 career. We were. I was director of operations for a portfolio of wineries. Really enjoyed the wine industry. It's. It's fun while you're young and married and no kids. So we. My wife and I, were really enjoying working in the wine industry. I was running operations, engineering facilities, everything except actually making wine. And then during that time frame, I started to dabble. I started to dabble in real estate. Built a little portfolio there. Started my own wine brand, which failed miserably. Wine is a very difficult industry. Started a small mobile repair shop, which did really well. Had an exit there. Nothing spectacular. Low six figures. And then my big break was I started a bitcoin mining server farm, circa, like, 2016, 2017. Sold going into 2020, kind of that boom there. And at that point in time, my wife and I said, hey, we have some funds now, because this was a very good exit. I mean, we hit the market, timing perfectly. Let's take some time off and figure out what we want to do with the rest of our lives. Where do we want to live? You know, everything. We had one son at the time. Napa is a gorgeous area. We love the wine industry, but it's not really conducive to children. There's just no other families. There's no playgrounds. There's nothing except wine. And children don't do very well with wine. So you tried? Yeah, we tried. We took off, bought a big rv, remodeled the whole thing, started going. And then on the day one, my wife said, hey, Jack, I have to tell you something. I'm pregnant. So we're like, okay, we're not new to this. We weren't trying, but, you know, God has his ways. And a few weeks later, we do the ultrasound, and it's not one, it's two. So we had. We had. We have twin girls now.

[Will Smith]

For your rv. It's gonna be a tight rv.

[Jack Carr]

Really tight rv. So we stopped. We stopped and we had the kids. And then I had this epiphany. I said, hey, I gotta go back to work. There's three kids in this house. It's not just, you know, three mouths to feed. It's now five mouths to feed. We're bringing in help to, to help out with the twins because it was a little bit, you know, 302 years old as a. Is a wild ride.

[Will Smith]

Wow.

[Jack Carr]

Yeah. And so we brought in some help. We had to pay for that. And I said, hey, you know, this, my run rate isn't going to last as long as I thought it was, especially if I want to buy a business and work for myself moving forward. So that's when the search began. You know, I was, I was on Twitter in 2020 through 2022 looking at everybody buying businesses here and there. And kind of the, The Twitter in 2020-2022 was a wild ride of like people were out buying businesses and paying crazy multiples and it time and atmosphere. And so I started my search much like everyone else, got really serious and in about a year I found Rapid Response, which is the business I bought H Vac Residential Service Company. I chose H Vac Residential Service because during my tenure at the wine industry, it was like the only thing I didn't know how to do. We were doing our own carpentry, our own plumbing, our own electrical troubleshooting, like, like industrial electrical troubleshooting. But I couldn't figure out H Vac. So I was like, I have to figure out this for myself. But also I think that's a moat in addition to the moat. You know, there's all this kind of tailwinds on the back side and I feel like I've been really good at seeing those tailwinds. So I've been, I was watching as PE started moving slowly into the industry kind of around 2020. It wasn't the boom it is now. And so with that, I purchased Rapid Response in June of 2022.

[Will Smith]

Jack, let me stop you there with a couple follow up questions. So you had success in starting businesses from scratch and yet you were really drawn to the idea of buying a business. And I guess you were turned on to the idea from SMB, Twitter. It's kind of when it was peaking when I used to talk about it a lot as well back then. Right. So. So you were basically seeing all these people do this and, and you liked the model even though you'd had success as a, as, as somebody starting a business from absolute scratch.

[Jack Carr]

I mean, I had success, but I also had failure. Right. So what people don't talk about is you see all their, you know, every time they succeed, but we don't talk about all the failures. And the 0 to 1 is extremely difficult. It's a time period where funds are very, very tight. They're usually coming out of your back pocket. And it's less of a. The phones are already ringing and more of a how do I make sure I have product, product market fit? How do I make customers come to me? And with the wine industry, it was fairly silly, but the brand and my type of wine industry, if you watch me on YouTube, I'm bearded, you know, bald, generally muscular man. And my key demographic was like 45 year old Midwestern housewives. Like. So I'm trying to sell to this demo that I have no idea about and I don't understand why they're buying. And it was just a very difficult. I saw the difficulty of startup. Right. Zero to one is a hard, hard road.

[Will Smith]

Yeah. But you had this success with the server farm. And by that do you mean that you were hosting miners? Is that what it was basically web hosting or mining host miner hosting.

[Jack Carr]

Exactly. So we bought something like 30 miners back in 2016, ran them all the way up to 2020 and then sold the package, the location, everything that came along with it, as well as I had the extra bitcoin from kind of all that mining in that, that meantime.

[Will Smith]

So how much bitcoin did you have? Is that really where, where, where your liquidity comes from or is it. Was it actually the mining business?

[Jack Carr]

I mean, it was probably, I'd say a 60, 40 split because dirt like that time frame between 16 and 20, you know, electricity was still high. But as the bitcoin crashes, right. You're not making anything. You have to sell it all to get electricity costs or to pay the electricity bill. And so you, you take little shavings here and there all the way for four years and, and you kind of just eat it until it pops again. And it, luckily it popped again and I exited on those. And then I exited on the actual servers themselves.

[Will Smith]

Fascinating, man. Well, you're, you're the second guest to come from the wine industry, Matt Raila, a couple months ago, who bought the termite inspection business and, and SoCal, he went down to LA to do that and. Or maybe. Yeah, or maybe it was Orange County, I think it was la. And then of course Chris Kerner probably been two years, but Chris is well known on, on Twitter and elsewhere. Also had a mining business along with, along with Nick Kaluski, his, his partner. I don't think it was very active in that, but the world gets smaller. I think you probably know Chris and.

[Jack Carr]

Nick, both of them. Yeah, we're in some groups together.

[Will Smith]

Yeah. Really cool. Okay. And the exit of this business. Can you give us directionally what that looked like?

[Jack Carr]

It was more.

[Will Smith]

More or less than seven figures?

[Jack Carr]

It was slightly more.

[Will Smith]

Okay. Okay, great.

[Jack Carr]

So it was enough to. To really as, you know, 28 years old, 30 years old, whenever that was. It was enough that it. It put enough on the table to be able to say, hey, let's take a step back and, and look at what we actually want to do.

[Will Smith]

Yeah. Yeah, for sure. Well, congratulations, Jack. That's a. That's a great win. Okay, so you decide you like H Vac because you don't know H Vac, but I guess what really, what. What that was was you. You saw it as. As technical as you all were at the wine business. H Vac was the one weakness because of the complexity. So you. You saw that there was kind of moat there if you could get. If you could be on the other side of that table with an H Vac business, there's good moat because it's not something that people can easily pick up and do for themselves.

[Jack Carr]

Correct. Yeah, it's. It's something that. That has enough kind of. I don't want to call mysticism, but it's. The refrigeration theory in itself is so unique that, like electricity and water, they kind of flow in the same theoretical pathways. But refrigeration theory is. Is different in itself. And so to have to wrap your head around that takes a. A solid study. It takes, you know, a decent amount of time to figure that out and understand that. I mean, the electrical side of, you know, an H Vac unit is. Is pretty straightforward. But the refrigeration theory is. Is definitely a moat that even tenured techs, as I. I run this business now, they still have trouble with it. And so it. It's this. It's this really difficult thing that, that if you can figure it out and you can figure out how to get there and understand, builds this nice mode around your business that if you're good with it, especially if you're good with it, you have already beat out the other 50% of the companies around you.

[Will Smith]

That's fascinating, Jack. I've underestimated my. I've had problems. I've had to call H Vac company here twice in the last seven months and. And both times it was just part of the. The AC unit died. First we needed a new, I guess, compressor. Then we needed a new motor. So it seemed pretty easy to me.

[Jack Carr]

Yeah, I mean, it's easy if you just throw parts at it. Yeah, yeah, yeah.

[Will Smith]

Well, And I'll say on our pre call was the very first time in my life I'd heard the phrase refrigeration theory, which I. Which I love. That has a certain ring to it.

[Jack Carr]

Yeah, right.

[Will Smith]

I didn't know it was a thing. So that's good to hear. And you're an engineer by, by training you're mechanical. Mechanical engineering in college. Great.

[Jack Carr]

Correct.

[Will Smith]

Okay, so you, so you have a thesis, basically you're going to go find an H Vac business. Give us a little bit on your search and what are the geographical constraints, if any?

[Jack Carr]

Yeah, so my belief, even starting way back then, was that you have to. You can't get everything you want. Right. Because there's only so many of exactly what you want to buy in, in a certain geographical location. Right. We were in Boise, Idaho. The number of H Vac companies that wanted to sell and the number of H Vac companies that wanted to sell to me were, you know, there's 10, there's 10 companies there. So the ability to get one of those 10 companies is extremely low. It's difficult. You can write them, you can email them, you can send them letters all day. You're not going to get it. And then who knows if they'll pick you even if they are selling. So my belief was you have to pick industry or you have to pick geography. And so I picked industry. And I was looking at Nashville, Austin, Florida, for a small period of time, Charlotte, North Carolina. So my second part of my thesis was a pick this trade with a tailwind that was difficult, how to moat you need a license, which I knew I could get, and then b pick it in an area that's growing really quickly, which, circa 2022, those were the biggest growing markets. Right. Everybody's moving out of New York and California and they were bombarding these places and the builders were going like crazy. So the second part to that was saying, hey, you know, looking five, six, ten years in the future, how do we know that we can grab a good market share? And we knew we could grab market share if there's new customers in that market. Because H Vac is one of those companies where people really love their H Vac people. They have some guy that they've been using for 10 years and unless he messes up big time, there's a very low chance that you're ever going to grab that customer, in my opinion. And so we were looking for an area where there was lots of turnover, lots of people selling, lots of people buying, moving, etc. Etc. In the hopes that that would make and make it an easier time to grab some market.

[Will Smith]

Yeah, so you, you needed to get people before they already had a relationship, so.

[Jack Carr]

Exactly.

[Will Smith]

So you couldn't go into kind of stagnant markets because then you were going to try to have to try to steal customers, which is very difficult in this industry, as you believed. What do the following Acquiring Minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum. They all went through the Acquisition Lab, the accelerator in community for people serious about buying a business. But they represent just a sliver of the Lab's success stories. The number of deals across the Lab's cohorts now stands at over 120 with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build, the book that introduced so many of you to the very idea of buying a business. The lab offers a month long, intensive, almost daily Q and A sessions with advisors, live deal reviews with Walker, Deal team introductions and an active community of serious searchers. Check out acquisitionlab.com, link in the notes or email the lab's co founder, Chelsea Wood. Chelsea buythenbuild.com the last part of the.

[Jack Carr]

Theory was we wanted to be in a big pond, right? There's small fish, big pond. There's big fish, small pond. What, what I've learned now is, you know, maybe there's no right way to do it. Big fish, small pond, you can gain the entire market. You know, small city, third tier city, very, very easy to grow and kind of engulf that entire market versus small fish, big pond, which is what we are now. We are competing regularly with 100 million dollar companies, big PE back monsters which can be good and bad. But that being said, at the time our belief was hey, we want something where we can grow and we can grow fast and there's plenty of opportunity. Was that the right choice? Now you know, that's, that's, I don't know. I don't know. You ask me in a few years.

[Will Smith]

Yeah, well, a couple thoughts there, but first I just want to, I want to highlight what you said about a growing market. I've had numerous guests. Alan Lockridge immediately comes to mind. Alan who bought a business in, in, in Charlotte and his businesses. It was backyard stone work. So think patios and pergolas otherwise. And so construction business, project based, you know, all the things that we're told to avoid, but it's gone really well. And one of the Things that he really calls out is just being in a growing market. Charlotte has been a growing market, really strong market. And that tailwind can really not be underestimated. I, I probably underestimated just how important that is. But, but I've heard numerous guests, Allan and others say no, it's, it's been, it's been, it's in a big, it's been a big deal. Jack, how come I didn't hear you mention DFW in that or Denver? Those are the other two big markets that we always hear about.

[Jack Carr]

So I, I not, I, I love Denver for skiing. I'm a huge skier, not a huge fan of Denver dfw. My wife and I did a trip a long time ago where we drove from Austin all the way up to North Carolina. We weren't a huge fan of Dallas, Fort Worth area. We really loved Austin. It was quirky. You know, there's a lake right there. The weather was nice. We drove through Dallas. It just wasn't our scene. So we didn't, we didn't look there.

[Will Smith]

Gotcha. Okay. This point about big fish, small pond, small fish, big pond probably is going to be informed by what you plan, what your vision is. If your vision is to build, build a business that can be steady and, and not a giant growth story, but you just want it to be protected and generate a million dollars a year, whatever, indefinitely, that probably works best in, in a small market so you can get it to a place, lock in your market share and keep competitors at bay and probably be pretty comfortable. And, and, but, but it doesn't grow a lot versus the alternative which is big markets, small fish, big pond, where you, you're never going to be able to sit comfortably. But, but if you want to grow, you, it's an area where there's a bigger market so you can grow. But you're going to be, you're, it's going to be, the elbows are going to be sharper and as you've already said, you're going to have meer competitors. More serious competitors.

[Jack Carr]

Exactly.

[Will Smith]

So does that tell us what you wanted to do? Was this something?

[Jack Carr]

Wanted to, that's the background. So I mean we built this thing from, from, from day one, looking five, 10 years in the, in the future. I mean our goal by 2030 is to be a 20 million dollar shop. So we, you can't really do a $20 million shop in a, you know, a town of 50,000. I mean you could easily do a $3 million shop in a town of 50,000. A $5 million shop, be very comfortable. Like you said, own the entire market, keep competitors out for a really, really long time. Love up on your customers and, and be a staple of the community, which is very drawing. That being said, you can never or it's very, I shouldn't say never. It's very, very difficult from there then to expand into another city and then do the same thing because there's already another small company. So it's a very difficult thing to try and grow to where we want to be. So we had to go into a big market and you know the, the tribulations and the trials, they make you strong as a business owner. Right. The difficulty is what strengthens all those muscles. Like I would say that we in terms of customer acquisition are probably better than a 5,6 million dollar shop in a third tier city just because. Right. We have to compete against multiple hundred million dollar companies. So we've gotten really good with copy and how we find our niche and how we grab those customers and then how we convert those customers to be ours. Whereas you don't have to be as sharp when you're the only person in that town. You just have to beat out, you know, Bobby down the street.

[Will Smith]

Yeah, it's kind of the big leagues argument. You know, playing in the big leagues makes it makes you a better player. I will say though as I, I think it's a counter example. You tell me you know him better. Your co host, John Wilson. You guys co host, owned and operated podcast Plug the pod. Great well known pod for small business operations and John's been on this podcast and has a plumbing business and I think he's now tacked on H Vac. I think he offers, I don't know if he has electrical but he does. Yeah, he's got all three and started in a small market and is now well north of 20 million. But be because he's acquired into other markets. So. Right. So and so in fact he has done the playbook that I guess he was forced. He, he says on the interview he was forced to because he basically saturated his home market and was forced to go up to Cleveland. He's in Ohio to go up to Cleveland to, to grow. So it is possible, I guess harder.

[Jack Carr]

Definitely possible. Yeah, definitely possible. I mean he, he went ahead and did exactly what I said is he outgrew his market and then at that 10 million 8, 10 million mark which moved into Cleveland and then has done extremely well in Cleveland. So it's definitely possible. I mean he's a great example of that yeah.

[Will Smith]

Yeah. Okay, great, Jack.

[Jack Carr]

So. So you.

[Will Smith]

You look in your what? Look. Searching for H Vac on Biz by Sell in these three markets that you've identified.

[Jack Carr]

Yeah. So, I mean, our. We had a three pronged approach. We me is Biz by Sell. You know, I at one point scraped all the data from Biz by Sell to, like, see all the people in these areas and who was in this markets and who was selling. And then we went ahead and I started calling all the business brokers. I wanted to build relationships with them, talk to them, let them know who I am, let them know I'm a serious buyer, give them, you know, my personal financial statements so that they could see I was a serious buyer, which I felt was really important to getting my foot into a door where I could actually buy. And then finally a business came up that was. Well, a few came up that we bid on and tried to get. But typical story is, you know, we weren't in H Vac, I wasn't an H vac guy, didn't have an H Vac history. So the seller went a different direction until finally a nice little 780 and change gross business, H vac business came up. Rapid response. No online presence other than a GMB with like 60 reviews at 4.6 stars. And I said, hey, if this is, you know, this is the time we got to do it. Looking back, did not pay the greatest price for this business. I mean, kind of, you know, the buyer's trap, if you will. I was paying on a multiple of sde. And realistically, the business wasn't a real business. It was, you know, three techs, a dispatcher, and the owner who was doing some sales. And I paid for 780,000 in top line, 200 in SDE and change. I paid like a 2.5 multiple and ended up somewhere in like 600 range. I think it was like 620, 640 for that. Did. Did the whole SBA 7A, which was a great process. Closed in 45 days. And on June 13, 2022, I drove all my life in a U Haul, pulling a trailer from Boise, Idaho to Nashville. And I. I'm started Monday.

[Will Smith]

Jack. There are a lot of people who buy businesses that are that small, that are essential, you know, that are basically a crew or a. Or a very small team. Maybe not a lot of people, but it happens. I may be jumping the gun here, but you got what appears on paper to be a good multiple two and a half times. It sounds like you don't feel like it was worth buying almost, period. I mean, obviously it's, there's some price at which it's worth it. But to get an H Vac business at 2 1/2x, even if it's really small, doesn't feel crazy. Feels logical. You're, you're all that risk of such a small team is priced in, meaning you're paying a lower price. So what say more about why, in retrospect, it really wasn't even worth 2 1/2 x.

[Jack Carr]

So now, now that I've been in the business now for, you know, going on almost three years, I've realized that it's a, it's a buyer's trap. So a $790,000 H vac business in particular, I can't speak for every type of business in every place and everywhere. I mean, a subway, that might be amazing, I don't know. But for H Vac businesses, it's just not a real business. And when I say that, I mean, yes, it's technically a real business, but it doesn't have the systems, it doesn't have the processes, it doesn't have the lead generation. It doesn't have the people in place to dictate actually a 600, 000 sale. So, for example, right, if you grew that business, this business, to 2 million, you might have the same 250 SDE or EBITDA, because now you're paying an office manager and you're paying a dispatcher and you're paying all these other people who are the correct positions, the correct roles. They have processes in place. Now it's a business, but you're still making that same 250 seller discretionary earnings. So that's a business that I would pay 600,000 for. The business that I paid 600,000 for was a guy kind of managing, playing video games all day while he had three texts running. He would run and do one or two sales calls and then somebody would answer phones like there wasn't anything there from, from a, like a real business infrastructure standpoint.

[Will Smith]

Great.

[Jack Carr]

So, yeah. So, I mean, I always tell people now when, when we talk, because I get these questions about H Vac businesses. A lot is, is making sure that you're buying. Right, Right. So when I say that, it's understanding that this concept is extremely important, that when you go into a business that you know what the business is and how the infrastructure is set up so that you can make sure that that same 600,000 multiple from the 2.5 on the, the 250 SDE is actually worth that versus falling into this buyer's trap that, that I did. So I'll get off my, my pedestal there.

[Will Smith]

That's great.

[Jack Carr]

I mean it's very important. I mean you see a lot of new first time ETA fall into it as well. I was just lucky enough to be able to to grow my way through it.

[Will Smith]

And Jack, you, you, you gave us kind of a passing picture of a more appealing business. But let me press you on that. So what, what infrastructure boxes need to be checked for a first time buyer to buy an H Vac business?

[Jack Carr]

Well I mean just what size right. So yeah.

[Will Smith]

So what would the size be? What what is the size threshold then?

[Jack Carr]

If so I always try to let people categorize themselves when they're talking to me. So there's right. You can be an ops person, you can be an ex tech. Right. I've done H Vac for 15 years. You can be a marketing guru or and sales guru or you could, you could be a finance person. You know I have lots of experience in finance. I know how to build models and you know I know the playbook. That's all well it so it depends like for me I was able to to make this business survive because I was, I had the ops experience as well as like I technical know how I was able to figure out really quick which we can talk about in a second. I mean day one all my, all my texts quit on me. So I didn't we're get there believe we got to hear about that. But, but like if you're a finance or you're marketing I would say go bigger right. You make sure that you're buying at a 3 to 5 million dollars at the minimum so that you can have a full lineup of texts in place. You have six, seven, eight texts in place. You have managers to manage those texts and their technical know how you have maybe some, somebody working on a little bit of background marketing. They have kind of something in place for there to be able to get to 3 to 5 million. It you know, moderately difficult. They have a location. Well I was running out of a garage and then a storage unit and then a location. But yeah making sure like the, the importance of a location is, is huge because it's hard to hire if you don't have it. Nobody wants to work for you out of a storage unit. Trust me. And you know you're not going to get the top tier talent so they have to get them in other ways. Which we can talk about later too. But point being is Depending on what your skill level is in, you know, is it finance? Are you good at finance? Are you good at ops? Where are you good at? Is kind of the sliding scale of where would be the minimum I would buy and then make sure that whatever you don't have is in that company. Right. So I don't have a finance per or I, I'm not a financial guru. I'm not going to be creating models. So one of the first things we did is we went and, and found a bookkeeper that was really good bookkeeper service and that was one of our first hires. And so making sure like you're putting into your business what you don't have or you make sure to buy the business that already has what you don't have.

[Will Smith]

Yeah, well put. So you buy this business against 78090 top that top line, about 200ish, a little more than 200sde but basically three techs, the founder owner who does a little bit of sales, mostly plays video games and a dispatcher and but you do the whole SBA process, you buy it for 600,000, you move to Nashville with your U haul. It's. Are your twins born yet?

[Jack Carr]

Yes. Yeah, twins are here. My wife and flew them in with a friend the day before. So we were, we were all, all in. Ships were burned.

[Will Smith]

Great. Exciting.

[Jack Carr]

Okay, so day one, day one. So I should start actually the drive over is I got a heads up from the old owner that two of the techs had quit day one, third tech had quit. So what ended up happening was the owner, Mr. Video Games let slip to the, the supply warehouse probably a week before close that he was selling. Then I didn't have the opportunity to talk to the text prior let them know, hey, nothing's going to change, your jobs are safe, everything's safe, blah blah, blah, blah, blah. You know the, the really good leadership transition that everybody talks about. I didn't get the opportunity to even potentially get there because he let it slip. The guys went to the warehouse. One of the guys went to the warehouse, the warehouse told the, the tech that hey, your owner's selling. And then they said oh what? One of them was disgruntled because he wanted to buy. Another one didn't know me, knew I was going to come in and change things, which I mean was moderately true and he didn't like that. So they all scattered the day before I got there. So I started with a part time CSR dispatcher and day one I was running, running calls.

[Will Smith]

Wow. Jack. And so, so on A scale of a million to 2 million, how mad were you at the, at your seller? I mean, he's just made $600,000 off you and he just what, nonchalantly calls you and says everybody's quit?

[Jack Carr]

More or less. I mean I was, I was fairly furious. I mean, but on the backside I was kind of tied to him. Right. So I was furious at him because. Right. I just bought this business, I just paid a ton of money to get here, to move my life. This is it. And but at the same time, right, I'm tied to him because I don't know H Vac. He does kind of. He know he's supposed to know H Vac. He's done it 16 years, so he knows H Vac. I don't have any texts, I'm running calls. We have a two week transition. He's moved his family down to where he was going. So he was already all out of the state as well, ready to go. And there's a two week transition, transitionary period where I have him teaching me H Vac. Like I'm, I'm the helper. And he's going around doing these maintenance and service calls. Meanwhile, I'm trying to figure out what maintenance and service is. What goes into a maintenance there, I don't know. So I mean really coming in blind. And so I mean, luckily residential service, a decent portion of, of the troubleshooting, when you run into issues, comes from electrical, right? So it's like you said, it's a compressor, it's a motor, it's a contact or it's something that's electrical. Which I had a huge amount of experience troubleshooting. Like that was what we did at the wineries. Not a big deal. The problem came back to refrigeration theory. It's like, oh, what is a superheat in a subcool? I have no idea what this means. Like hookup gauges, looks, there's numbers there, that's something. But so I had to figure that out really quickly. And what that was was essentially me starting every, every one of my mornings at like 3:30, going on YouTube, trying to understand, you know, what does this mean? What does this mean? How do I so just really the school of hard knocks really quickly. And because it was the middle of June in the south, so it was hot, sweaty, people were calling, people were angry. But luckily we had those calls in, I was able to pick it up pretty quickly. And I got another tech on board shortly after that. Not the best tech in the world, but was Able to hire.

[Will Smith]

So wait, so Jack, did you go do any calls by yourself?

[Jack Carr]

Yeah, actually. So I only, I told the owner, since he wanted to leave, to go with his family because like I said, he'd already moved out of state, his family had moved out of state. I let him go after a week. I said, you know, there is nothing that. And because I'm still furious, right. I just bought this. I just like, I'm tied now to it. You know, what am I going to do? But that being said, there was little value in having him. Like, I was Learning more from YouTube. You know, I'm not the great. Wasn't the greatest at customer service, but I was learning like, oh goodness, I have to figure this out fast. And I did. I mean, you, you got to do what you got to do. And I said, you know, you're holding me back. I'm just going to learn this on my own kind of, you know, it's my style. Let him go after a week and then started running from there solo with my dispatcher, giving me calls, lining me up. And I was a tech.

[Will Smith]

And, and so for how long did you, how many calls did you do solo house calls and you were just residential all summer.

[Jack Carr]

So I mean, three to seven a day for, you know, four months.

[Will Smith]

Wow, Jack, that's crazy. Okay, so first of all, when the news breaks that, that everyone's quit, is that a fetal position moment? I mean, are you, are you an absolute panic? Are you more just kind of.

[Jack Carr]

Yeah. I mean, stiff drawed?

[Will Smith]

I'm, I can, I'm gonna, you know, push through this or what's, what's your emotional state?

[Jack Carr]

I mean, emotional state probably just walk like, you know, when you get into that people getting that shock scenario, it's just, you know, the realist in me just went, it is what it is. You have to run these calls, you have to figure it out, you have to do it all. And so I, like I said, I just turned it on, wake up at 3, learn H vac till 6, run calls till 6pm, do all my paperwork, try to hire, put stuff on, indeed, get people on board, start the next day. They're very similar. And so, I mean, bless my wife for being able to put up with me during that time period. But it was just nose to the grindstone. I mean, getting upset or, or worrying about it or, you know, going into fetal position would be probably the opposite. It probably would have ended me, right, because I wouldn't, I would have just froze.

[Will Smith]

And, and so being that it's the Summer in the South. Happily, you only have to learn half of H Vac, the AC bit. And so you've got another season to.

[Jack Carr]

Learn H, which I did, which extremely accurate because then starting fall, I had to do the opposite. Is like, okay, now I have to learn heating really quickly. So, I mean, there's only a few that still haunt me that I just didn't figure out or I didn't treat the customer right because I was, you know, didn't know. But there was only like, I mean, less than a handful. Once again, it's really, really basic if, you know, electrical troubleshooting. So we, we got there, we survived. I mean, but it taught, you know, Will, it taught me a ton. It taught me a ton because I was able to be every position in my business, which was amazing. So now it's super helpful. But also, you know, we hear, I. I hear about this, and I'm a big proponent of it, is building a company my way. I got to, I got to have the call volume coming in day one. But I also got to design every step in every system and every workflow throughout my business, for good or bad. Whereas, you know, the. The alternative is I buy the company. The head tech, I started with all three techs, theoretically, and the head tech, you know, he doesn't like me raising prices or he doesn't like me doing this or doesn't like me doing that and threatens to leave. And then I'm scared of him leaving so that I don't do, you know, I don't raise those prices. And now we're stuck without being able to grow because, you know, there's just so much that I hear like these, these stories over and over again. And, and the nice part was a, like learning all this refrigeration and all this H Vac made getting my license super easy. I went in there, knocked it out, got my electro license, got my plumbing license, got my H Vac license. Like there was just nothing. By doing it, I was able to just then go and get those licenses. But also, like, I'm not afraid of my team. Nobody can hold me hostage at my business. If they don't like something they don't like, they don't like it. But at the end of the day, it becomes my choice. And I don't make those choices out of fear. Fear of losing people or fear of a tech not liking it, or fear of, you know, just whatever because, you.

[Will Smith]

Know, because you know your business so well, you. Nobody's. Nobody's got that power over you. Whereas A typical acquisition entrepreneur, there's going to be so many corners of the business that they don't know, at least in the first couple years, that they feel hidebound by the, by the, whatever that person is in the business that controls that, that thief.

[Jack Carr]

Yeah. So like a common one we get a lot is we can't sell that for this price. And the answer is, well, are you providing value? Are you doing your full evaluation? Because I know I could sell it for that price because I have, like, I've been in the field and I've sold it. So why are you having trouble? Well, Jack. Well, no, this is not the core issue. The core issue is that you're putting yourself in the customer's shoes. When you need to allow the customer to, you know, to live their own life like it's not your job is not to be them. So I was able to get, be able to have that insight into my own business from day one because I had to. I've answered phones, I've been dispatcher, CSR tech, install, like the whole nine. The last thing I refuse to let myself do is braise. Because if I learn how to braise and solder properly, I'll do that too. I'll go out in the field at like, my wife will kill me. I'll be out there 9pm installing units. And so I force myself not to, to learn. That is ironic.

[Will Smith]

I don't even know. I don't even know. I couldn't tell you what that is. I've never heard that word in this context.

[Jack Carr]

Yeah, so when you like when that compressor that they had, they had to cut it out and then they have to like, essentially it's welding the copper back together. So that's the one thing I won't learn is, is welding copper just.

[Will Smith]

You won't learn it just so that you're not tempted to do it?

[Jack Carr]

Because I'll do it. No, I know I will. Like I'll be out there doing it.

[Will Smith]

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[Jack Carr]

I mean, it's accurate. I mean it's definitely one of the things and it's something that I see a lot, so I mean I fully agree is that a lot of people have those feelings. Once again, I, you know, I talk to a lot of H Vac business owners and that's one of the big issues that they have. You know, my advice always is right, use leadership, trust, build the rapport with your employees, but let them know, like I'm just not going to be held hostage. We have to make decisions in this business. It's my business now. And then as you go forward with it, own those, own those decisions, own the, the change management, own the process and don't, don't let that happen because that's going to be the one hindrance on growth and on you feeling like this is your business. Right.

[Will Smith]

Yeah.

[Jack Carr]

So yeah, that's my advice.

[Will Smith]

Yeah, no, it's great, Jack. And, and so I also got to ask so Are you just a genius that you figured this stuff out? YouTube University for a few weeks because, because you yourself, Jack, said that H Vac was the thing that you guys could. Had such a hard time figuring out back in your winery days, so. But now you're making it seem like, you know, three hours of early morning study for a few months and you're good to go. I know you're not good to go. You were, you know, there weren't jobs that didn't go your way and you were still learning, but like, still, that's a pretty tight timeline to go from zero to tech. And you also had the electrical experience, so you were, you weren't starting from absolute zero. But anyway, address that. That I feel like, wow. So you could learn how to be a tech that quickly.

[Jack Carr]

I think that. How do I want to put this, Will, you're backing me in a corner here. I'm not a genius. I just, I think when people get put in positions where, you know, it's sink or swim, you have a choice, and the choice is to sink or swim. And so, you know, H Vac has consumed my life for the past three years. Yeah, it's three hours of book experience, but it's then followed up by eight hours of infield experience per day, every day. So. So really, you know, it's 11 hours of experience a day for four months straight. Yeah. I mean, you become a decent tech. I mean, that mixed with my background in eight years of electrical troubleshooting. You know, I'm not saying that anybody could do. I'm not saying that anybody can't do it. I'm just saying that it's a sink or swim moment and I'm putting in the work and the hours to know. Yeah, I mean, get me wrong, I've had help, a lot of help along the way. People to call. There's great people in this industry who will take your phone call and try to help you answer questions. There's great tools out on the Internet that will let you. I mean, you could probably use AI now and say my sub cooling system, my super heats is. What do you think this is? And I would probably tell you now. So it's, it's, it's. I'm, I'm very good at utilizing resources. And then I'm very good at, you know, when something comes to a sink or swim moment, making sure that I swim because I don't like losing.

[Will Smith]

Well, you know, Jack, we, we. The burning the boats phrase is one that's used and overused. But this is this is the, the perfect example of why that term exists. People talk about burning the boats and then they actually, it's fine. You know, they don't, they, they don't need. But you were, you were really in a position where had you not burned, burned the boats, you could have, you would have turned around like, this was a disaster. So having had no out was really what, what forced you through the, you know, my, my other favorite is the Winston Churchill phrase, when you're going through hell, keep going. Yeah, it's the only way. The only way out is through.

[Jack Carr]

And that was the way we got out. So, I mean, realistically, the only way we got through was to keep going. And we had some amazing hires. We've, you know, found some amazing people that have been able to help. It's not only me. I'm not the only person here. But we, we, you know, within that first year, we were through the kind of cap where I'd say the pain point of the SBA loan. So we just grew past pain, and now we are in different pain and we get to grow past that, and that's just, that's owning a business.

[Will Smith]

Yeah. Well, we're going to get into some of the tactics and how you've done this, this growth. There's a lot there still to go, Jack. But, but I do also want to just kind of tease out this philosophical question of, okay, you've explained to us what you, you were in some ways uniquely positioned to figure this out and to become a tech in an accelerated way. You just articulated why perfectly. You, you're an engineer by training. You had all this electrical experience, and then you were basically getting three hours of book study and eight hours of field study a day, day after day after day, and you burn the boats. So you learn quickly. That makes sense. Still, you know, you learn quickly and you were uniquely positioned to do so. Still. It, it, it makes us wonder, especially given how much you've grown this business from basically zero. Just you, Jack, is that, is the takeaway to your story going to be that actually starting a blue collar business from scratch is better than buying one?

[Jack Carr]

The opposite. Opposite, Will, really, because, because you started.

[Will Smith]

You effectively were starting from, you had your customer support rep part time, and you. And that was it. And you've built this thing in two years, up to 3 million bucks in revenue.

[Jack Carr]

Yeah. You know what's worse, Will, than all your techs quitting on you day one and having to figure out how to be a tech? It's the phone's not ringing. And you have texts that you need to schedule and get out and you're paying them and they're believing in you. So the one thing I can never complain about and why we chose this, part of the reason why I chose this specific business was its location. It's, you know, it was the only. I'm going to say this because I know, I know that I said before, like big fish, small pond, like we are in the Nashville metro, but in our small community or our suburb, we are really the only or the only fish. There's like one or two others, but we're the biggest. And so what's worse than not having like that then everybody quitting is not having the phone ring and not having those four to seven calls a day. So we were still able to generate like large amounts of revenue. Even with me running with somebody answering the phones is able to hire someone because we were a semi known business.

[Will Smith]

Yeah.

[Jack Carr]

And so, you know, that's, that's one of those hills I'll die on. Is. Is. I think ETA is extremely important because I've, like I said in the beginning, I've started up a business and to not have sales and to not have those phone rings, not have that phone ringing is much more difficult than having to figure out operations in my mind because I'm an operations guy. I'm sure someone on the other side who's like a marketing guru would be like, why would you ever say that? Just, you know, I could make the phone ring. I just need to hire someone to do it. So, you know, for me, I think, I think from my personal experience, ETA was the best, best route for a home service business. And then, I mean, even buying wrong, like ETA also opens you up. Like you have to pay to get into the game. And if you don't pay to get into the game, you can never play. You know, there's people who, from 2020 who've been, they're still on Twitter, they still haven't bought anything. It's been four years and they're still sitting on the sidelines at their W2 part time search or whatever the case may be. And my, my advice is go do it. Like you just, you just have to do it sometimes. If there's any theme to this, this episode, it's just do it. Whether that be learning H Vac or just going on buying something. Because once I had that starting point, part of our growth was. Or decent part of our growth was organic, but also a decent part was more acquisitions. Right. So we bought two businesses after and without buying the first one, we couldn't have bought the second and third one or fourth one. But that would.

[Will Smith]

I really want to get into this. Jack, this is great. And I'll just preface it by, by basically saying that this is a theme, what we're about to hear from you. This is a big theme that when you get in it, you know, as a searcher it can be so hard to find a business to buy. But once you're in the game and you've built and you've bought a business and other people in your community, your local area have heard about it. Opportunity, not always, but there's, there's definitely a theme here where a trend where those opportunities start coming to you and all of a sudden doors open that you didn't even knock on. It's such a, it's such a dramatic difference. And, and there's been plenty of acquiring minds, guest examples who were able to do a bunch of bolting on relatively quickly just by being in the game. And so you're, you're the next example of that. So please give us these examples.

[Jack Carr]

Yeah. So in the first six months we started, I'm running the business, I'm engulfed in it. We're posting on Facebook, we're doing everything right, we're growing slowly, we're starting, still trying to hire people. And because I'm in the business and I was asking, I've been asking my distributors, everyone I talk to, who I know that my subs, anybody who knows anybody else, who, who's in H Vac, I'm saying, hey, we're always looking to buy, we're always looking to expand. And so an opportunity came about six months later to buy a, another $600,000 shop. So slightly smaller than my first shop. And we ended up closing on that acquisition for 1312 to 13,000 with the first $6,000. Big difference, right? You're smiling Will. Big difference from 600,000 to 12,000. But, but like that's the key is A, I would never have had that opportunity hadn't I been in the business. But B, I would never, the opportunity actually wouldn't work because it was like a one man shop with a helper. And so there was really no systems. Like it's just a book. And so that's kind of the key is like we now by then we had our, you know, csr, we had our dispatching down. Like we had some systems in place for, for marketing. Like we started, we're starting at systems we can, can afford to take a book On Yeah. And so we were able to close on that book for 6,000 up front. $6,000 in rev share based on that portfolio of customers. We paid out in like the first month or two months, which was amazing. And that was, I mean, a huge growth point for our business. We also got a great tech. That helper came on to work for us. He worked for us for like a year and a half. Amazing guy.

[Will Smith]

And I mean ju. Just to be clear, Jack, forget the book of business, you would have paid probably you would pay 12,000 bucks just for a good tech, right? If you were out there paying a recruiter, that's, that's something you'd pay. You pay a twelve thousand dollar fee just to hire a good tech. So incredible.

[Jack Carr]

It's definitely, there's definitely value in, in being able to grab a good tech. And so that was huge right out the gate because the tech had been in the industry for, you know, 20 years and you know, all this stuff, but we were still out of a storage unit. So speaking of hiring, like hiring was so difficult at that time that that had a huge value point to it just to be able to have that extra tech. But then again, now we also have the phone ring. Like I, I got a text message this morning asking, hey, is this, this, this guy's business? Did he sell to you? Because we need help. And so we're still getting unsolicited calls to that number two and a half years later that didn't convert over with his, you know, with his book, but they had his number saved somewhere. So we're still getting those opportunities.

[Will Smith]

And I wanna tell us the second deal, Jack, because then I want to dive deep into. When you say buying a book of business, what does that mean exactly? What are you getting? You've teased it, but what's the. Tell us the second deal.

[Jack Carr]

Second deal was 290. So it was a guy who's working part time as a firefighter, part time as an H Vac guy. I found his deal on, on Facebook Marketplace. Like I saw the truck was up for sale and I said, I wrote him a message and said, hey, you know, I see this truck is up for sale. What are you doing with your, are you shutting down business? What are you doing with it? And he goes, yeah, I'm just going to go firefight full time. This is too much. I said, what are you doing with all those customers? Like who's servicing them? How are you taking care of them? They have warranties, etc like that. And he said, you know, I might Help out with a few of the older ones. And. But like, I'm letting them know I'm shutting down. I said, well, how about you sell it to me, I'll take it over and the truck and I'll just buy out your inventory. I'll buy out everything. And that's what I end up doing. I ended up buying that business, which was 290 for just around 25k, with most of that. That 25k is in, in the truck itself.

[Will Smith]

In the truck, yeah.

[Jack Carr]

Yeah. Which we also needed. Right. We, we needed vehicles as well as we're starting to like, really start growing with this, this, these two acquisitions. And so we ended up.

[Will Smith]

And when you say 290, he was doing 290 of revenue. So that's, that's how you value the book of business.

[Jack Carr]

Yeah. So I mean, the way we value. To get to really technical, we, we have. I mean, this is the way I've just done it because it's. My belief is I take their last three years of customer base and I say, these are customers that have called you or if you've called them and, and gotten out there in the last three years, these are your customers. I'm going to take 50% of that. So if you have a thousand customers in the last three years that you serviced, I'll take 500 of them. And I'll say, hey, out of these 500 customers, my customer acquisition cost is this a hundred dollars. So I'm going to pay you five. Is that 50,000 two zeros? Yeah, 50,000 for all those customers. Because that would be the same cost for me to get 500 customers. And that's how I value these books of businesses. And it adds enough buffer in there to be able to do really well. Because the worry is always attrition, right?

[Will Smith]

Exactly.

[Jack Carr]

Especially with the smaller ones. It's like, hey, this is my uncle's friend or this. I, I know him from church or, you know, he's my firefighter buddy's mom. So we're gonna lose those customers. We're gonna lose a lot of those customers. And so we want to make sure that we are buffering ourselves properly to be able to handle that kind of loss and customer base.

[Will Smith]

And the. So, so that's why you're only paying him basically for half his customers is to give you that buffer. Right?

[Jack Carr]

Half of the last three years of his customers. Yeah. So not even this whole customer base. Just like, hey, who have you talked to? Who have you worked with in this many years? Because they're the ones who are most likely to call you a second or a third time.

[Will Smith]

And that's how you value his book of business. But does he in fact give you the entire history, the book going back to since forever more than three years ago?

[Jack Carr]

Yep. And that, I mean, that's huge. So the, the, the next step, Right, that we do. So yeah, like you were saying, the book of business essentially is just we, we want their phone number. If they have a Google business profile, Google business page, we want that. And then we want your history like as far back as it goes. The more history you have, the better because we can outbound to those customers, we can reach out to them and let them know specials and this and that. And so that's kind of where all the value is, is the phone number, having people call you and the ability to call them from somebody's number that they trust.

[Will Smith]

Yeah.

[Jack Carr]

And that, that's part of the attrition is they have to trust. And so we do a lot of steps around once we've, we've gotten that, that book to try and keep as many of those customers as we can.

[Will Smith]

Well, I want to thank you for that. We're going to get into that right now. But just so your experience so far, do you feel like that 50% number is accurate to, to, to what you've now seen, that you basically, you're basically able to retain half the acquisitions customers or, or, or yeah, because I assume that 50% number was just kind of like finger in the air. You're kind of like, yeah, so, so what, what is the actual number in terms of how much you retain?

[Jack Carr]

So the actual number I think is going to really depend on the processes you put in place to keep those customers after you make the transition. That being said, I mean, I don't think that number is wrong. I like the 50% number. And moving forward, that's the number we continue to use when we make offers. And it's because it puts enough buffer in there just in case. Right. All you're doing is picking up phone numbers and, you know, addresses and history. There's, there's some value there, but that value is really arbitrary. Right. It could be, you know, in the last 50, those could be all new units that he installed. That's all he does is install new units. The, the 50 we pick up is not valuable then. So it's just a really good buffer, in my opinion. It adds enough. Our first acquisition I think was closer to like 70 to 80% and then the second one was somewhere around that range as well. So we, we generally keep 70 to 80% and that's us calling out to the customer, getting them on the schedule for free maintenance, and then kind of keeping them in, in perpetuity.

[Will Smith]

So you, you get this, you get this list essentially and you proactively reach out to them with calls that, that's a lot of manpower. I mean, how many? We're talking hundreds of hundreds of calls.

[Jack Carr]

Usually we start off, there's a few key things we do. The first one we did with, with that first business, the 600,000 top line business, was we actually had the old owner leave a voicemail recording. So when you called in, you would hear him and his voice, who you've been used to over the years, saying, hey, I've partnered with Rapid Response. They're going to take, I'm moving out of the state, but they will take care of you. They'll take care of all my warranties for one year, they'll take care of all my, my service contracts for another year. Press 1 to be connected. And so that was huge, right? People got it right away, oh, he's moving out, but they're going to take care of us. And then we'd offer, we'd send out a text message blast to his entire portfolio saying, hey, we will maintain your unit for free. We've partnered with him. Let us maintain your unit for free. We wouldn't call right away, we'd text. Text blast was the easiest, most effective. We'd email and then we'd send mailers. And so we hit them on all three fronts outbound and then the one front inbound. And we were able to, to keep most of the customer base when we did that. And then the other 20 that we lost, you know, I don't know if he lost them or, you know, it was, they were already gone prior to us getting it. But, but from, from our metrics of that 50%, 70% to 80% stay based on doing those kind of few steps.

[Will Smith]

That's amazing, Jack. And so just so again, you, you text him. Once a text blast, you email them an email blast, you send a mailer and then when they, when any inbound, you get to his number, says, I partnered with rapid response, press 1 to be connected. And, and, and, and the offer was when you say free maintenance, what do you mean a single, a single visit where you go check their stuff, their machine, their units.

[Jack Carr]

Exactly. We'll come out there, we'll do a free maintenance so you can get to know us, get to, you know, get to know our people and we'll do your spring or your fall maintenance for free. And then we get out there, we load up on the customer, we do really good maintenance, take lots of pictures, send the full report, do the full evaluation. And with the goal being like one, have them get to know us so that they become our customers. And two, offer the maintenance program so they can actually become a maintenance pro, you know, customer long term.

[Will Smith]

And just for, for the audience who doesn't know H Vac, that is one of the appealing things you can do in H Vac which to get a little bit of recurring revenue is offer what is it A, a bian twice annual visit where tech comes out and checks your AC unit and checks out and checks your furnace seasonally sort of thing.

[Jack Carr]

Yeah, essentially I try to compare it to like an oil change on a car is your H vac system is a mechanical system, just like your car is a mechanical system. And so you have to do some level of maintenance on that mechanical system to keep it going long term. And so that's what we do. We clean coils, we wash it down, remove any kind of debris. We're checking electrical capacities to make sure that they're inspect your amperages in spec, the voltage going into the units in spec you don't have anything that's like oh, your ductwork is disconnected, which we get sometimes. And it's, people have been running their, you know, AC all summer and they go, it just doesn't really work as well as it used to. And we get under there and the system's not like it's not connected at all. It's not working, man. So like that's, that's what we do. And we do that twice a year to make sure a, that you're going to work in spring. You have the highest likelihood of not having a failure through the extreme weather is what I try to put it as.

[Will Smith]

Yeah. And just before we leave this buying and retaining customers piece, what about the online presence? What does that look like? They have a Google my business page generally. And what, how do you inherit that or what do you do there on the way?

[Jack Carr]

So we just, you port, port the phone number over so that it goes to whatever your VOIP is or your, your phone system. And then we take over the Google business page, we take over the email address, transfer it, we leave it usually as like Joe's plumbing by rapid response for three to six months and then we finally changed at the six month mark to be rapid response plumbing, heating and cooling and Then it's. Everything stays the same. The pictures, the reviews, you know, but it just now has our name on it. And we start driving LSA traffic, marketing traffic through that GmbH. Because GMBs utilize geographical location as it's like number one marketing tool to. To target people in that region. And then we target them to us and we start taking on phone calls and new, new customers that weren't even original customers of the said company.

[Will Smith]

So, so important you don't take down the GMB page or consolidate it with yours in some way. You keep it up and just put your name on it after some months.

[Jack Carr]

Correct? Yeah. I mean, and it. Some of it depends. Right. So what. Where is the GMB out of. If it's out of the person's house and like the firefighter gentleman, we just. It's still at his house. Like it's still at his house in that same location. And that was part of the contract is you can't remove this because we want to be in this neighborhood. We want your customers to see us in the same place that you were. And so, and it's no harm to him. He doesn't get any mail. There's nobody showing up at his door. Like it's just an online virtual hub for a location for a virtual hub.

[Will Smith]

And his, his agreement is that I'll keep it there forever, essentially.

[Jack Carr]

Yeah. Until we move it. And you know, we've. That's the other case which we've done is we bought the GMB and then we've just moved it to a different location where we want to be in. Right. So this location's not. It's underperforming. We're not getting as much marketing because of X, Y and Z. So we'll just move the GMB to a satellite office that we install.

[Will Smith]

Jack, this is fascinating. I feel like you just really shared a tremendous amount of gold there. Obviously it's very H Vac specific or maybe more broadly home services specific. So it's not going to be applicable to everybody's business. But I think the larger theme there is twofold to think if there's. If you're in a business where there are books of business, look for opportunities to acquire retiring owners or owners getting out of their business where they wouldn't have another buyer otherwise because they're just too small. And you now being in the industry can absorb that book of business. It's an amazing growth hack. And then how to price that. I guess that would be another piece of this, how to price it. And then, and then Crucially, have a dialed in, you know, getting 100 of your attention process to retain those customers. I mean it, obviously it all comes down to the retention of that. That's where you really extract the value from this, from this acquisition. And if you just assume they'll all come with you, you're leaving a lot of money on the table or customers on the table. Great stuff. What did I miss?

[Jack Carr]

Oh, that's, that's exactly it. I mean that's the, the process and kind of the slow roll of two years of my life consolidated into, you know, three sentences.

[Will Smith]

Jack, I want to basically. So we've touched on it a little bit with Google my business. But reviews again, online reviews again, this is going to be most pertinent to home services businesses, but there are a lot of buyers of those. Before we turn there, is there anything more you want to say up to this point in the story? I guess, I guess I would just ask before we turn our attention to reviews, any other tactics that you've used to grow as fast as you have.

[Jack Carr]

One of the hills I'll die on is get into a good group. So I mean I'm sitting on this, this pedestal on your platform saying, oh, you just do this, you just do this, you just do this. And then all of a sudden magic happens. But the real behind the scenes to, well, how did you learn all this and how did you get here and how do you know all this is community, right? So you can't get into the community until you bought in. I buy my first business and one of the first things I do is like, how do I get into an H Vac mastermind? How do I surround myself with H Vac business owners? How do I meet these people so I can learn? Because there's, there's companies out there that'll give you the business playbook. There's you know, nextstar. But I'm a brand new business owner. I don't have any money. I, well, you know, relatively I'm not going to spend $30,000 on, you know, best practices business. Just there's, it's not in the, in the books right now. And so what I did is just essentially tried to find good people like myself who want, who own H Vac businesses, who have done this, who have been in, in here. And what I've learned is that all the problems are the same. Like every H Vac business owner has the same thing like recruiting, sales, it's all the same. You tweak it a little bit here and there. But getting Surrounded by these people is what helps you. So someone asked me, who's running a $30 million business? Not John, different person who's running a $30 million H vac business. How do you do books of business, Jack? The same conversation that we just had, I had with him, and then I'll ask him in two months, well, how do you do this and how did you do that? How's your membership program look? And so being surrounded and by those people and by the industry and, and immersing yourself in it is going to be the actual key to learning everything that we're talking about today. Yeah, because it's one of those things that it's so multifaceted that you're never going to figure it out all your own. As much as I like to just be a, you know, do it myself, YouTube university guy, I would not be sitting where I'm at today. I don't even think I would have a business currently if I didn't surround myself with other great owners who helped me get here.

[Will Smith]

Well, good of you to, to give them credit or not take all the credit yourself. But I, I, and I think the takeaway there is just how much, how quickly you can learn if you apply yourself to it. There's, I mean, you, you were, boats were burned. You had to go learn to be a tech. So that's a unique case. But of course, there's so much available online for almost any industry. If you just get up three hours early every day and get on YouTube, you can learn a ton quickly. And then if you proactively, like you said, proactively reach out to people in your industry, you know, everybody listening is buying into an industry where there are dozens and hundreds of people way smarter, more experienced than you in this industry and cultivate those relationships. You can learn real a lot quickly in, in the world we live in today, which is a great thing. And you've, you've taken full advantage of that. By the way, Jack, do you know Pete Cavarella up in Michigan?

[Jack Carr]

I do not.

[Will Smith]

Pete's a great guy. He was on the pot. His episode aired probably two weeks ago. Bought an H vac business in, in Michigan, a sizable one, like 12, 13 million million in ste. And anyway, great interview. Really.

[Jack Carr]

Also a guy.

[Will Smith]

Yeah, yeah. And also a guy who, who really makes a point to be educating himself and networking himself through the industry. All right, so reviews, we, we know that. Everybody knows that consumer B2C businesses are all about online reviews these days. But what's your take?

[Jack Carr]

Yeah, I mean, we're I think we're bringing this up because we were talking about best practices and you know what, what makes, I mean we talked about in the beginning is when I bought the company had 4.6, 4.7 stars at like 60 reviews. We're up to over 800 reviews now across five locations total. That original location being our kind of hub is, I think I looked at it yesterday, is just shy of 500. So from 60 to 500 in two and a half years, making sure that one of your best practices going into a world of AI and marketing is, you know, reviews are never going away. And Google now is the only place where all consumers meet to look at home service reviews. Right? They look at home service reviews, they look at review reviews for food and this and that. And at the end of the day making sure that one of the ways that we grew so quickly was being able to focus on really high level of service and asking for those reviews because those reviews are what goes back into the Google algorithm and tells you, tells Google that you're a good company and that they should recommend you to other people.

[Will Smith]

Jack, I would, I would think that today doing, getting good reviews, asking for reviews would basically be table stakes and, and it wouldn't because we're all, we're all consumers and we all know that we have an interaction with a business and five minutes later we get a text, hey, review us, please. And so I would imagine that basically just having good reviews wouldn't accelerate your business. It would basically just like I said, table stakes. It would allow you to survive and live but not thrive necessarily because everybody's doing this. And maybe the answer is no, everybody's not still not doing this. I mean, you bought a business and, and he, and he wasn't doing it. But do you see what I'm saying? It seems like it's no longer edge. It's basically you gotta be asking for reviews because all your competitors are.

[Jack Carr]

Yeah, I mean, so the, to some extent, yes. Right. Everybody's doing reviews now. Home services has always lagged in certain areas and one of those areas being kind of the, the change from the late, you know, 2016 to now is there's a group of people who we've seen, now they're all running. There was never a hundred million dollar business in 2016 for H Vac or plumbing or service, home service. They're just, they weren't, they didn't exist. And then 2016 rolled around and we have a bunch of expansion with online presence and Google reviews and lsa and all these marketing tools that has allowed these companies to grow really fast. And so those are the table stakes is there's a group of people who have grown and now they're stagnated because they, they are at 14, 000 reviews. Like 14,001 isn't going to make a whole heck of a lot of difference. But I think for, for the smaller companies trying to get out of the, like the 60 review range, it makes a huge difference between 60 and 200. And then there's a huge difference between 200 and a thousand. So yes and no. Yes, in that it's very important. And I think it's still getting increasingly important as you grow. Because what we're seeing, I think from. And there's a marketing person out there who's probably yelling at your podcast that Jack doesn't know what he's talking about or he wants to add something. But. Right. Your reviews also, I, I guess as a service business, where I should start here, the service business, we don't have a storefront. Like we have a building, a warehouse, but we don't have a storefront. So our storefront ends up becoming our Google Business profile. Right? Everybody goes to Google. It's the one place we all meet to look at home service businesses. And so how do you make your, your virtual storefront stand out the best way possible, and that is through maximizing your Google Business profile. And a part of your Google Business profile. Probably one of the most important parts of your Google business profile is the reviews. It's making sure that Google's algorithm stays happy, that you're receiving reviews at these locations, that they're good reviews, that they have pictures and you're responding to them. And so like playing this game with Google and its review system to make sure that you're maximizing the potential is what keeps the phones ringing. And how we were able to maximize our growth potential is because we, even though, you know, we've already, like we talked about, we've already really won the Brentwood market. Like, there's nobody in Brentwood that if you're going on Google and every keyword is us, if you search it will be the first one. But what makes us stand out is we are four to five times more reviews than, than the next competitor. Better rating. And then so now Google says, these guys are awesome, right? They're kicking butt. Everybody loves them. So now we're going to improve them for SEO purposes. When you're on Google, we're going to improve them for our PPC purposes. We're going to improve them for our LSA local service ads, LSA purposes. And so it's, it's reviews are kind of the backbone that even though from like a visual standpoint of table stakes like yeah 400 versus 100, you need to have reviews to be in the game. But continuing those reviews in this review process is actually a big part of our organic growth because it's allowing us to do that hyper expansion. Yeah, yeah, sorry that was diatribe.

[Will Smith]

That was great.

[Jack Carr]

I knew nothing by the way about Google, Google reviews, Google Business Page, Google anything two years ago by the way. So that's, this is what happens when you get in the home service industry. You go down these giant rabbit holes of algorithmic how to get marketing and leads.

[Will Smith]

Well and it just reinforces the point that the home services game is a digital marketing game today. I mean it's a lot of other things but it's, it's. I mean if you, if you can't get your digital marketing dialed and this by the way too Jack is, is an example of how you've benefited from being in, in you know, a bigger market, maybe you wouldn't have had to have learned as quickly as you, as you have if you bought into a small town, third, fourth tier kind of market which as we talked about at the top anything that you really wanted to say Jack, that we didn't get to.

[Jack Carr]

So let me just reiterate thoughts so that before I leave your, your audience with you know, some foreign big takeaways. The first one is, is buy right buy correctly. This 250 SDE times three multiple. It's, it's not a real thing. It really isn't a real thing unless the business is a real business. And where do you start to see those is in the like your, your friend Pete up in, up in Michigan. Like that is a business where you would pay a real multiple on because at 13 million it has all of its system. It has it probably even you know, C suite team starting to be put into place. Whereas your 600, your 1 million dollar business, it's not a real business yet. So make sure. I'm not saying don't go for those 1 million dollar businesses because they're great opportunities. I'm saying if you are going to go for that, make sure you buy correctly and understand the risk associated with that. And one of those risks being everybody leaving day one. So the, that that's the first point. Second point is making sure that, that you're building it your right way. So you bought the business, great. But don't be held hostage by your employees. Understand your business from all aspects and make sure that you're using leadership and, and solid, solid facts to go off of, to grow your business. But don't be held held hostage on pricing or on how this works or how that works. Listen to your employees. I'm not saying don't, don't listen to them. I'm just saying at the end of the day, you're the one on the hook. I'm on the hook? You're on the hook. If you buy the business, you have the, the PGs. You have probably 10, 15 PGs, personal guarantees. So you build it your way because if you build it someone else's way and it fails, it's still on you. So it comes back to you. I think that the third one would probably be that I do it over again with eta. I wouldn't start from ground up because even with all the Google knowledge I know getting those reviews and getting to 10 to 1 in home services is a very, very difficult task. Especially when you're in a market that has people with 14,000 reviews. Yeah, it's hard to catch up. So if you can buy someone with four or 500, you've just shrunk that gap by years and years and years. And then it also gets you in the game, get in the game play. I mean, no, no business is going to be perfect. Just find one that works and then you'll be open to a slew of opportunities. And lastly, I think it's somewhere make sure that you're just, you mastermind with like minded people. You learn these, these Google tricks. You, you're learning hiring how to hire properly and how to price and what's flat rate versus dynamic and how to change your business with best practices that you wouldn't get without networking with people like myself, with you know, people on, on Twitter or X or whatever you call it. Get out there and actually you know that it's a big part of running and owning a business is making sure you're, you have a community around you of strong individuals.

[Will Smith]

Fantastic, fantastic recap Jack. Thank you for that. If people want to reach out, how do you like them to do that?

[Jack Carr]

I still love Twitter. I mean it's not the same as it was but the, the H Vac Jack on Twitter, it's mostly me talking about having an emu at one point or you know, plastics and H vac stuff. It's very exciting stuff. So the H Vac Jack on Twitter the other place that you can find me is, is owned and operated and.

[Will Smith]

Tell us, plug the podcast a little bit or tell it, tell us about it. What's the frequency?

[Jack Carr]

So I think we're doing two a week owned and operated.com and it's just us talking about exactly the stuff we're talking about here. It's, it's Google business reviews and why they're important. It's, you know, how we're, we're buying or how I'm buying certain businesses. It's talking about, you know, CRMs and Service Titan and all the fun stuff that goes into a, any kind of home service business. So swing on over there, listen to us. You can hear more me me and John and appreciate it.

[Will Smith]

Jack Carr, really fantastic interview and what a ride. Congratulations on what you went through and how you've, you've, you've built this business back, became a tech yourself and we said that you ended 2024 with 3 million in revenue. The business had about 700. You built it back to 3 million. You think you're going to get to 4 or 5 million in run rate by the end of this year. Just really, really tremendous.

[Jack Carr]

Yeah. So 100% year over year for the first two years and then we're going to, we're going to beat out five this year is the goal. So we're on track for four already in, in month, week three of month or I don't know when this is launching but essentially month one of the year we're on track so we're hanging tight. We're excited. Thanks, appreciate this was fun. Sa.