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- [00:00]
Will Smith
Despite all our enthusiasm for buying an existing business as a path to ownership, we are not dogmatic about it. There are any number of reasons why starting not buying makes perfect sense, and today we hear from someone who looked closely at buying a business but chose against it, opting to start from scratch. The perspective of Kevin Moyer is valuable not just because he neatly organized his thoughts in a great article on Substack, but because he has much more experience as an owner operator than many contemplating this decision. Kevin had actually started five territories in the Smash My Trash franchise network. He built these territories up to over a million in revenue and 260,000 in SDE. And get this has them running mostly passively. So a small blue collar business running on its own. A real and rare accomplishment deserving of its own interview. But point is, it gives Kevin a lot of SMB credibility and you will learn from his experience and thoughtfulness. Now the caveat here is that Kevin is just in the earliest months of his new venture, so we'll have to get him on again a couple years from now to see if he reflects differently on this decision to start a business versus buy a business. Here he is Kevin Moyer, Co Founder and Owner of Golden Home Access.
- [01:31]
Kevin Moyer
Announcements.
- [01:32]
Will Smith
M and A Launchpad is Back for its Spring show. 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 sampling of the workshops and panels that are packed into a very full day and that day is May 3rd.
- [02:07]
Kevin Moyer
The show is in Houston.
- [02:09]
Will Smith
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 in the show notes. Also, if you haven't checked out Smith List for a while, there are some great opportunities posted, including a 120-year-old manufacturing business recently acquired by a Holdco that is looking for a president. A $6 million commercial roofing business is also looking for a president and an owner and investor is looking for an entrepreneurial Director of Operations to build and operate five clinics in a weight loss franchise system. Head to smithlist.com to check out these new roles for entrepreneurial operators. And while you're there, sign up for the alerts so that you're notified as we post yet more opportunities from the.
- [03:08]
Kevin Moyer
SMB and ETA ecosystem.
- [03:11]
Will Smith
Smithlist.com Smithlist.com 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.
- [03:37]
Kevin Moyer
Podcast I I talk to the people who do it.
- [03:40]
Will Smith
If you ask owners in the ETA and search community which insurance broker provides highest quality work, great outcomes, and has a practice dedicated to searchers and acquisition entrepreneurs, one name comes up again and again. Oberle Oberly Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by a two time successful searcher, August Felker, which makes Oberle a specialty insurance brokerage for searchers by a former searcher. And if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way to get to know August and the team at Oberle to take advantage. Check out oberle-risk.com that's O B E R L E- risk.com link in the.
- [04:39]
Kevin Moyer
Notes Kevin Moyer welcome to Acquiring Minds.
- [04:44]
Mahir
Thanks Will. Super happy to be here. Listen to many, many episodes of your podcast. So I'm honored to be on.
- [04:50]
Kevin Moyer
Oh I appreciate it how it's great to hear. I'm not sure the podcast did the trick because here we are about to talk about how you're not going to buy a business. Your story does have many of the features of a typical Acquiring Minds interview. Entrepreneurship through small business ownership, blue collar businesses, an epiphany after reading Buy, then build. But as I said, it doesn't actually.
- [05:14]
Will Smith
Feature you buying a business.
- [05:15]
Kevin Moyer
You have decided against doing that and instead to start a business from scratch. You laid out your thoughts in a structured and well written piece that caught.
- [05:26]
Will Smith
My eye on Substack.
- [05:28]
Kevin Moyer
So I wanted to capture those thoughts of yours in an interview. Let's do this chronologically. Kevin Fair to say that it starts in 2021. Let's. Let's begin there or wherever you need.
- [05:41]
Mahir
Yeah, so the summer of 2021. I'll get there. I'll give a little bit of background on kind of how I arrived at that point. So growing up I was not like a lemonade stand type of kid. I was not really exposed to entrepreneurship in any way. I was very much like my default like factory settings are follow the path, follow the rules. So when I listen to people come on and talk about all the things that they were doing, I'm like, I wish I was doing that when I was growing up. That wasn't the case. I went to college Got a job out of school and fortunately I found my way into some entrepreneur books like the Usual Suspects, like the four Hour Workweek and Rich Dad, Poor Dad. And it planted the seed, struck a chord and then I thought about doing something and then I guess fortunately it was fortunate I ended up finding my way into venture backed SaaS, moved out to San Francisco. And I know you were in this world too, Will. Maybe you'd agree with me, like if you're not going to do something entrepreneurial, it is like a next best thing. It's very exciting, it was super engaging, worked with super smart people, made lifelong friends, learned a ton. And it like scratched the itch just enough that I didn't really ever think of doing anything. I still wanted to do something. And when you spend time in that world, it becomes like, all right, if I'm going to start a company, that's what I'm going to do. I'm going to raise venture money, I'm going to hire a bunch of people and try to have a billion dollar exit. And I just, there's something about that. I was like, I don't really think I can do that. These people are smart, way smarter than me. I don't know if that's what I want to do. At some point, at some point along the way, I got the search, like some search fund paper in front of me and I think the takeaway from that was supposed to be like, this is how you structure a search fund. And for me it was, you can buy a business. Like that was my takeaway, which I had no idea. So that seed got planted. And then like you said in the summer of 2021, I was just kind of having like this mounting frustration I would call it, and just like lack of satisfaction with these jobs, even though they were super exciting companies. I felt like a little guilty about that. I wasn't sure what it was at the time. I now know exactly what it was. I've been able to think about it. I just joined in that summer. A really cool company, they're still doing well. I was like the 10th person. I thought this was going to be exactly what I was looking for. It felt more like a project than a company. It's like very scrappy. I was like, this is awesome. This will scratch that entrepreneurial itch. And then as all good startups do, it grew and we hired a bunch of people, started moving a little slower and it just wasn't scratching the itch for me anymore. And then on the personal side, I turned 30, moved to the suburbs, got married to my awesome wife Gina. And it was on that honeymoon where I had all these thoughts bouncing around in my head about wanting to do something. I'm like, all right, I. I don't have kids yet. If I'm going to do something, now's the time. I. A lot of people, I think, have just like a running reading list. I just was by the pool, hit buy, then build. And just like it was the perfect timing where things started clicking in my head. I said, cool, I'm going to do something. Kicked around some different ideas, looked at some sims, kind of realized, as we'll talk about later, like, wow, this is like, this is, you know, this is some big kid stuff here. Maybe I'll start with a franchise. One of my best friends, Zach Hargis, had just signed on for Smash My Trash. And when he told me that, I was like, it wasn't actually right away, let's do Smash My Trash. I was like, let's go look at some franchises. This seems like a good play. I looked at five franchises of them. I thought Smash My Trash was the best. So I followed in Zach and his partners, Adam's footsteps on that one and bought a Smash My tr, Smash My Trash de Novo franchise out here in California.
- [09:10]
Kevin Moyer
When you were in working in San Francisco in startups and B2B SAS, you now know. What did you say? You didn't know why at the time, you were losing enthusiasm for it, but you now, upon reflection, do. Did you tell us what that was?
- [09:24]
Mahir
Yeah, no, I can, I can shed a little light. I think it's just kind of a general. It was a general sense at the time. And when I look back, I actually think it was two things. It was one, I just became a little bit less enthusiastic about the venture model for employees. I felt like if there's like investors and founders and employees, the investors get to spread their money over a bunch of startups, some of which will do very well. Most will fail. For founders on like, I guess you could say, like a risk adjusted basis, you know, there's a huge outcome possible, not to mention like social, you know, status that comes with that and like you can take secondaries pretty easily in subsequent rounds, take some money off the table. And I just felt like if I was an employee and I was going to hit the same number of successes that like a VC would, would be best case scenario, I'm going to have, I have a sequential career where I'm going to go from job to job and I have a finite amount of time to pick a winner. And I just, like, didn't feel great about that. And then I think the second and more powerful thing was, I think looking back, what I was really excited about and interested in were the phases of these startups where I could personally go in, move things around, make changes, and move the needle. And then it's not just move the needle for the company, but also personally capture some of that value for myself, if we're being honest. And I just think it's hard to do that as an employee, especially if companies grow by rule. And that's when I found out about eta and I read Buy, then Build. That was kind of the light bulb moment where I could find something to work on, where I could directly move the needle. I could reap the benefits. My upside is as big as I can make it if I work at it. And the thing that actually got me to jump was like, even if I don't make as much, I will enjoy my life more. And I just got to pick something that isn't going to be disastrous. Which was part of what went into the decision to start with a franchise. Now, as we may get into it, was riskier in retrospect than I thought it was at the time. And it's probably a good thing I didn't realize exactly how risky it was because maybe I wouldn't have done it in 2021.
- [11:25]
Kevin Moyer
You're, you read Buy, then build, but you're also at a hotel and you have. I should name this moment because it's one that comes up again and again with my guests, where they, their, their eyes are open to the fact that there's actually money in small business ownership, which so many of us don't realize because it's all the, the biggest names in business where we assume all the money is made. What was your moment?
- [11:51]
Mahir
Yeah, so I was coming from. I was working at startups. So it's like if you make a lot of money, it's because you started a company and you raised venture Money and you IPO'd or exited. And that was just like, what was in my head. And so I was in charge of booking the hotels for our honeymoon. And I waited till the last minute, so the only place available were these expensive places that I was like, you know, it was very much pushing our budget. And while we were there, you just get to talking to people in, like, the sauna and by the pool and wherever. And I had Buy, then Build. I was like in the middle of reading Buy, then Build, and there's like a guy who had a chain of food trucks. There's a guy who had like a commercial real estate thing. A couple other people I just talked to here and there, a lot of small business owners. And I think maybe if I wasn't reading Buy Then Build at the time, I wouldn't have connected the dots. But it was like, very appealing to me that, like, you could just have like the classic, like, boring business was a term that was getting thrown around then and still is now. But I was just completely, you know, that I. It got me. I got bit by the bug and had that moment where I was like, wow, if these people can come to this place having, you know, whatever business they have, then maybe that's something I should look into.
- [12:58]
Kevin Moyer
Great, Great, Kevin. So, okay, you are exposed to eta. You also hear about franchising your friend doing a Smash My Trash franchise. How did you decide between those two paths? Now, this is not the big decision that we're here to talk about today. It was an earlier decision, but actually a decision where you decided against ETA also. So how did you decide between those two?
- [13:20]
Mahir
I think it was insecurity at the time, which I actually think was pretty well placed. I was like, you know, you pull up a sim and I'm realizing, like, I don't even know what questions to ask. I. I think in general, I think that anybody can do eta, but I am somebody who really does think if you have like the classic investment banking, private equity background, I think you're definitely at an advantage. So I just didn't think, and I still think to some degree that now it would be hard for me, which gets into the decision to start something. I was a little intimidated by the prospect of buying someone else's business and I bought the franchise Logic, which is like, here's the playbook. You just take the playbook and your job as the operator is to just run hard and make it happen, which is true to some degree. Not always true, not totally true. I thought that, that what I was really looking for was like a. The most direct line I could find between effort that I would put in and value that I could create. So I was looking for something very specific and I thought that a franchise, more so than what felt like a really big blind leap, which is buying a business, would be a way to do that.
- [14:28]
Will Smith
Okay, well, we're not going to hear.
- [14:30]
Kevin Moyer
The entire Smash My Trash story, but we do. But it is a good one actually in its own right, and it is the context for your now decision. So let's let's do here what that story in brief.
- [14:44]
Mahir
You.
- [14:44]
Kevin Moyer
You proceed with Smash My Trash.
- [14:46]
Mahir
Yeah, so I signed tell people what.
- [14:49]
Kevin Moyer
It is, Kevin, because we all know. We talk about it like everybody knows, but sure, sure, yeah.
- [14:53]
Mahir
So Smash My Trash is a franchise. The basic idea of the business is we have these trucks with a thing on the back that's a machine with a boom arm. And imagine like a rolling, spiky drum at the end of it. What it does, it backs up to open top dumpsters. Like if you've seen those big rectangular dumpsters, and it smashes the trash inside. And the reason why a company would want us to come do that is that those dumpsters fill up with trash. And every time they get full, you got to get it taken away. And there's a cost, a fixed cost associated with that. It's a hall fee. So every time it's full, you call the trash company. In some places, it's 300 bucks, 700 bucks, thousand bucks. It's expensive to get it hauled. That trash in there is not space efficient. It's fluffy. So our job is to come in, smash the trash down, and it's a very simple business model and value proposition, which is we figure out how many holes we're going to reduce in your month, we quantify that, it's very easy to do, and then we do a split of the savings and our fee is part of it, and then the customer ends up saving the rest. So it's a no brainer of. Of a service if you can get somebody to just agree to it and let you try it. Which is again, part of my logic of, like, I wanted to find a straight line between, like, I just need to go find where these dumpsters are and just find somebody in charge of it, and I can convince them to do this. And it's going to be like the straightest line between me working and me, you know, having a successful business. I don't have to be smart about deal terms. I can just kind of get into it and do it. So. So that's Smash My Trash in a nutshell.
- [16:21]
Kevin Moyer
And. And it's a relatively new. Or it's a quite new system, actually.
- [16:25]
Mahir
Yeah, yeah. Relative to a lot of franchises, it's relatively new. I think they started franchising it in 2020. The guy who started it started a couple years before that as an independent business. And then in 2020, they started franchising.
- [16:39]
Kevin Moyer
Well, it's come up before on the podcast, and it's gotten a lot of attention, I guess. Because it was a young and growing franchise in, in the ETA world. So people may have heard about it. Great. So you proceed with that. What does take us down? The the story of your Smash My Trash franchisee.
- [16:57]
Mahir
Yeah, so I bought the franchise in. I signed the paperwork in December of 2021. This was like peak, you know, delays with supply chain. So I opened in August 2022 and I had three territories, one truck, one driver. I felt like I was skating on thin ice. Because the great thing about Smash My Trash is you have recurring customers. But those first couple, it's like you really need them. And I'm new at it. I don't exactly know everything. One driver, one truck. Truck goes down, driver gets sick, very stressful. So that first sprint there was me driving. It's 90 minutes away. So my territory, I bought it thinking, you know, I'll just figure it out. But it was 90 minutes away, which is tough. It's tough to drive, you know, multiple, multiple hours a day. But that's how I got so into your podcast was on the drives to and from. So it was a benefit in that way. But I was going down there just knocking on doors. I had somebody overseas put a pin like zoom in on Google Maps and put a pin on every single dumpster in my territory. And I would just drive around and I was doing basically door to door sales. Eventually bought another truck, hired another driver, ended up driving down a little bit further south, even further from my house. So like two hours into the agricultural center of California and kind of found like a trash gold mine down there. Ended up buying two more territories and ended up growing a lot there with some of the agricultural companies. And so the current state of the business, we have three trucks, between three and four drivers, I have a virtual assistant and then it's me running payroll.
- [18:35]
Will Smith
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- [19:46]
Kevin Moyer
Can you tell us some numbers?
- [19:48]
Mahir
Yeah, so it's not very big, but it's. I'd say so. In 2024 we did just over a million in revenue. Our EBITDA, if you want to even call it that, was like 420. And then my total debt service for the year was like 160. So my total take home after debt service and everything was about 260.
- [20:09]
Kevin Moyer
And you've gotten it to be, forgive the use of this cuss word, passive.
- [20:17]
Mahir
Decently. Yeah. I built it from the, I mean one month in I realized like I'm not going to be able to keep driving down here. So I did things and I made a lot of decisions along the way that made it so that it could be passive. And yeah, so sitting here today, I haven't been there since mid August. I haven't actually been down to the territory and laid eyes on the trucks or seen any of my drivers since mid August. Now I still do stuff here and there, but I very much try to make it something that's in the background and running as smoothly as it can without too much attention.
- [20:50]
Kevin Moyer
Well, as I said, this could be a story unto itself. So let me just distill what we've heard. You start from now. It's a franchise, so it's a little bit of a business in a box. It's not. So when I say starting from scratch, it's not scratch scratch, but it is de novo new territories. You acquire a couple and now you have what, five in total or four?
- [21:10]
Mahir
Five territories.
- [21:11]
Kevin Moyer
Five territories from scratch. You build up the business basically door to door. All, all those million dollars of revenue in 2024 or your last year were, you know, you eat, you ate what you killed, you. You found all of those customers yourself. I recall from the pre call that you didn't pay yourself for basically two years. But, but now the business is doing a quarter million dollars in SDE. But let's be clear that SDE does not require 40 hours a week from you. It requires single digit hours, if that a week. So that's a remarkable outcome by itself. Kevin, is this, is this the answer that my, my listeners are looking for rather than buying a business? I mean what, what's the magic here? How have you done that?
- [22:03]
Mahir
I think I got, I did get lucky with picking the right franchise in a market that was really, really juicy for what the service does, I think the customers.
- [22:13]
Kevin Moyer
The trash gold mine you refer to.
- [22:15]
Mahir
Yeah, exactly. Like, that wasn't an insight that I had before I bought it. This is like I drove around, drove enough further out into the sticks and found that there was a severe need for the service. So that was a lot of luck. It's a good brand, it's a good franchise, it's a good business model. I mean, after royalties, it's where the margins in the 40%, that's good. That is, I think when it comes to the passivity, that's what gives me the wiggle room to do the things that make it passive, like overpay. My drivers pay an arm and a leg for maintenance just to get things done quickly. Like, if you're running a business at a 10% margin, you have. I think you just have less optionality around the decisions you can make and the investments you can make to make it passive. Again, not an insight that I had getting into it. It's just something that I've kind of stumbled into along the way. It's a really good model.
- [23:05]
Kevin Moyer
And by the way, when you talk about the. The fat margins and how that allows you to pay premium for, you know, pay your people well and pay premium other things and reinvest in the business more aggressively. In eta, of course, there's often a big debt payment, and so that constrains business buyers somewhat. This really burdens the business.
- [23:24]
Will Smith
But you, in fact.
- [23:25]
Kevin Moyer
And so one listening to you might think, oh, well, he doesn't have that either. So he's got that wiggle room. But in fact, you have debt on this business. You have debt for the vehicles. You had startup that you took a loan for the. Like an SBA loan for.
- [23:37]
Will Smith
To.
- [23:37]
Kevin Moyer
For startup. How did that work?
- [23:39]
Mahir
Yeah, so to get started, I took a $350,000 SBA loan, which covered basically the first truck. So I, I injected some cash too. Over between my friend and I, we each kicked in collectively somewhere in like mid 100k. And then 350,000 loan from the SBA and we bought the truck and the franchise rights and then some cash in the bank. So out of the gate, the debt service was like five grand, I think, at the time. And I closed two accounts and the debt service was covered, and I closed two more and the driver was very quickly covered after that, and I guaranteed the driver's hour. So at a certain point in the first couple months, it felt like it was just gravy on top of that. So I think the magnitude of the Debt service relative to what the business was able to produce, because it's a good model and it's recurring, ended up not being something I had to worry about. I worried about it in the first two months a lot, but after that, it hasn't really been an issue.
- [24:36]
Kevin Moyer
Great. And Kevin, if you are doing so well with this, with five territories, why is your. Why are you not trying to accumulate more territories?
- [24:44]
Mahir
Yeah, thought about it super hard. For the whole last year, it was basically like, do I double down on this Smash my trash business or do I do something else? And the decision was largely personal, I would say. I had my first kid in January of 2024, so he's a year old now. We have another one on the way. And this business is. If you're gonna grow it that aggressively, which you kind of have to, because growth happens in these big step changes. So in some businesses, like the new one we're starting, which we'll get into, you can kind of just like slowly increase your Facebook and Google budgets over time and kind of grow gradually. With Smash My Trash, it's like you buy a new territory, you buy a new truck, you hire a new driver. And so it's a big capital outlay. And in order to grow to keep pace with that, you have to either be there in person, which is what I know how to do. I know how to go there in person and physically grow one of these, or you have to hire somebody really great to do your sales. And given the fact that I just started cash flowing it last summer, it's like I could hire a sales rep. I'm still thinking about it, but right now I'm in a phase of. I don't want to be driving down to Salinas every single day like I was before. I think it's in a good spot. It's covering a lot of our living expenses as is. And so I made the decision to try to do something that I could do more locally without having to drive down there as often.
- [26:04]
Kevin Moyer
And why not apply the ETA model to your. To smash my trash and approach the territory owner there where you live or in a neighboring. Neighboring territory.
- [26:15]
Mahir
Yeah, did a little bit of that as well. A lot of the people around me are doing well and have similar setups where it's either, you know, totally passive or somewhat passive, and there's just not a lot of appetite yet to sell. I do think eventually there will be a play to do that. And I. I think there is a. There's another door that I would go down which is Potentially bringing on something like an operating partner who could actually like fully get the playbook for me at a level above like, you know, a salesperson that I would hire and actually like take ownership and grow it that way. That's a path I've considered, but we'll see. A lot of it kind of depends on the capital needs of this new business. And I think the right path will become clear over the next year or so.
- [26:55]
Kevin Moyer
Two more big questions before we move to the next point in the story. You've said a little bit about how you've made the business passive, but this is a blue collar business. Your employees are basically CDL holders, truck drivers, and they're an hour and a half and two or more hours away from you. So all we hear about blue collar businesses is that they are people intensive and management intensive and people problems everywhere. How have you been able to make this passive and not had to, you know, manage your people too closely? Physically closely?
- [27:31]
Mahir
Yeah, that's. It's the hardest part. So I think part of it is trial and error of picking the right people. I mean, I've gone through a lot of employees. I now have like my core three drivers who are all great. But it's taken one guy I've had since the very beginning. And then I've made a lot of bad hires and done a lot of bad management along the way. I have three really good guys, which is the biggest part of it. Some other things I've thought about is I just pay them above market. Again because of the margins. It's pretty easy to justify that. And I think it's a very simple way to make people happy in their job. Like, I know they like the pay. They feel like they're getting paid better by this business and other opportunities they have in the market. And then I think I've tried to create kind of like a virtual management layer by stapling together like processes that I think out a virtual assistant who helps me with stuff, some technology, some automation. So we do things like we pull reports on, you know, drivers. They have to do their work order, which is like the biggest pain. They have to go in their phone. They have to take the right before and after pictures of each smash, put in all the right information and then we're doing it right. So I had my VA go in every week. She just kind of figures out the percentage that they have accurate and or not. When we first started doing it, it was like 50% across the board. I mean it's nothing crazy. She just puts it In Google sheets. I take a screenshot, send it out in Slack and it's just slowly gotten up to a hundred percent over time. So it's just little things like that, like trying to be clever about like what the problem is and how we can try to solve it without I think what the obvious answer seems to be in a lot of cases, which is like you just hire a manager to solve the problems. Certainly not perfect. There are certainly some things that go on that I need to fix. But it's been good enough to get it to the point where we're at now.
- [29:18]
Kevin Moyer
So a very close attention to processes and, and little improvements, little incremental improvements, automation where you can. And then just cycling through people until you found good people and you yourself became a better manager.
- [29:34]
Mahir
Yes, exactly right. Yep. And the people I have now I've had for about a year. So hopefully the cycling through people has come to an end. I really hope.
- [29:45]
Kevin Moyer
You also have topic number two before we move on. You also have now, having been a franchisee, a pretty strong point of view about franchising as a concept and opportunity. You want to share thoughts there?
- [29:59]
Mahir
Sure. I think I mentioned before that it's a little bit riskier than I assumed it was going in.
- [30:04]
Kevin Moyer
Yes.
- [30:06]
Mahir
When I talk to people, a lot of people reach out about like, hey, I'm interested in this franchise. What do you think? And the thing that I always try to get through is like the franchisor and the franchisee are extremely different businesses in every way that work together and like are generally aligned incentive wise. But there's certain areas where they're not and there are certain things to watch out for. I think franchising is a great path for someone like me who I wasn't going to do anything else. I didn't have the courage to go do eta. I should have maybe. Maybe if I did I would have just done it, gone a completely different path. I think if you find the right franchise, it can be a relatively good way to enter the game, so to speak, which is what I did. I think there's like the rollup play, which is a whole different thing. That's a really interesting play. You alluded to it. I forget the guy's name. You know, there's people you've had on who have done franchise type rollups. Yeah. And I think there are plays within it, but there's specific things to watch out for too. And there's particular ways you could get burned. And it gets as specific as like contract terms. Like you have to watch what the minimum royalties are. The minimum royalties are basically the franchisor sets them such that you either pay x percent of sales, 6%, 7 or 8% of sales, or this number, whichever is higher. And the reason why they do that is it prevents, it protects them from a scenario where a franchisee comes in and doesn't try and they could have sold it to somebody else. Makes total sense why it exists. It's no one trying to do anything bad. It's just this thing where if you end up in a bad minimum royalty situation at no fault of your own, you could get burned. Same thing for development schedules. They set it up so that you have to either buy X number of units or more trucks or more equipment on some schedule. And I've heard scenarios across all kinds of different franchise systems where people end up in a situation where they're being forced to grow in a way that isn't beneficial to them but is to the franchisor. And there's just those little traps that you pick up on that many franchisors out there is a trap. I think people sometimes think that it's like them being malicious. It's not. I think it's just like this weird kind of business model tension that exists because a franchisor should try to protect themselves. Those are the traps. I think there's a lot of opportunities where you can just avoid those traps or those traps aren't relevant. And I think the other side of the equation is you got to know what you're paying for. You're paying a really stiff royalty to these franchisors. And I think what I've kind of gotten better about thinking through is like, what exactly are you paying for? And trying to be specific about what am I getting in return for a really significant percentage of my sales? In some franchises, it's actually nothing. In other franchises, it's like Chick Fil A. You're getting. You're getting access to Chick Fil A. So the way I think about it, it's kind of like a business nerd thing. But the Seven Powers Framework by Hamilton Helmer. I think the way that I think about what franchisors give you is the powers are like scale economies, network economies, economies switching costs, cornered resource. And I think if you're in a really good fast food restaurant, you're getting access to the Chick Fil A recipe. There are certain franchises where you get access to a dealer network and you get better pricing. So you get scale economies. Some franchisees offer you actual value for your royalty. And many Don't.
- [33:24]
Kevin Moyer
Some of the resistance to franchising is about the royalty fee. And often you'll hear that the complaint is that what am I getting for this money? So that analysis of what, of really understanding what you're getting for that royalties is of course paramount. But I'm also hearing you have to really think through the devil is in the details between the relation, in the relationship between the franchisee and the franchisor. And there's a lot of pitfalls where there can be misalignment. And so that's where the risks, the risks are that I think you're talking about. But, but is it also fair to say, I guess this isn't unique to franchising. It'd be, it would be any business that you're basically, basically doing de novo. You had risk in the form of you did in fact take on a loan. I mean you had a lot of, you had a lot of capital capex in the business. But again, I guess that's not really intrinsic to franchising necessarily is not intrinsic to franchising.
- [34:20]
Mahir
But something that is, that I didn't mention is you actually. So you're personally guaranteeing the loan. You also in many franchise agreements are personally guaranteeing the royalties. So the minimum royalty schedule, either the minimum royalty or the percentage is like usually like a 10 year agreement. I don't think I had an appreciation, to be honest. I'm embarrassed to admit that. But like I did not have a full appreciation for exactly what that meant when I signed up that I do now. And I'm like, wow, okay, that's a pretty serious deal you're signing. You got to be really sure it's going to work out. In my case it did. Again, it wasn't because of any special insight. It was a lot of luck. But yeah, getting into a franchise is a pretty serious kind of long term decision in most cases with most agreements.
- [35:02]
Kevin Moyer
Great. Kevin. Okay, so you get your smash franchise, your smash territories to where they are and you start evaluating what's next and you revisit, I guess ETA and this is where you do some hard thinking and maybe we, we move into to some of these takeaways from your article. How do you want to see this?
- [35:23]
Mahir
Yeah, so I, I guess it was right around the time my son was born that I made the decision like, hey, I'm not going to be driving down there anymore. I want to start thinking about what's next. I was in a, I'm, I'm in a pretty fortunate position where I have cash flow Coming in from the Smash business, my wife works. She's great, super supportive of what I'm doing, earns a good income. I'm realizing, like, I actually like working on, like, this scrappy operation stuff, and I don't have a ton of risk appetite. I don't want to go to zero. So I started, like, you know, I was super interested in eta, like, the goal all along. I don't think I said this was like, after Smash, my trash. At some point in the future, I'm going to buy a business. I would listen to people who came on your podcast, and it was like, that is 100% what I'm going to do. But as I started thinking about my position and I kind of got a feel in the market of, like, it seems really competitive, my mind started going to, like, okay, I'm actually going to buy small. Like, that was kind of my approach. You've had guests on that have bought small and have been explicit about buying small is like, a way to get into an industry. There's someone out here, Nick Hashka, who I think you know. Oh, yeah. He's an impressive guy in my area. I've met him in person a couple times, and he's doing a pretty cool play right now in the generator space that I believe started with, you know, a relatively modest size acquisition. He has a great plan for that that he could articulate better than me. But I had all these thoughts bouncing around in my head of, let's just start, start small. And I heard a couple cases of people starting businesses, and I kind of got that question. I was like, is it crazy? Is it a crazy idea to just start something? Because it's like, all right, I've done a full 180. Like, I left this venture world, and I got all excited about eta. Like, what would starting a business actually look like? And I got excited about it, about it for a couple reasons. A couple, like, realizations that I made. The first is that I could choose whatever industry I want. So I'm looking at these sims, I'm trying to get smart about certain industries. And I was like, if I start something, I could actually just pick exactly what I want to do in the market where I am. That would make sense. That fits what I want. And I also liked a couple other things about it. I'm a big fan of Jeff Bezos. He's always talking about reversibility. And I think that starting a business is a reversible decision. Like, we are not getting a loan. We're not raising money from investors yet. It's a two way door.
- [37:37]
Kevin Moyer
Say more about the one way and two way doors, which is how Bezos characterizes this.
- [37:42]
Mahir
Yeah. You know, buying a business is a one way door. Buying a franchise, like I just said, you're signing a long agreement, you're doing some serious stuff, you're getting debt. It's a one way door. You could, you can't go, you can't.
- [37:52]
Kevin Moyer
Turn around and go back.
- [37:54]
Mahir
You can't turn around. And I think, and again. And maybe it's just because I'm not courageous enough, but like I feared a situation where I bought someone's business because with Smash My Trash, I have a lot of customers who are small businesses. I've kind of looked behind the curtain at small businesses and been like, I see how this would look on a spreadsheet and I'm looking at what's going on here and it's like two different stories and I got a little.
- [38:14]
Kevin Moyer
Say more. What did you, what did you see that, that spooked you from inheriting such a business?
- [38:20]
Mahir
Yeah, I mean, I was looking at sims and when you look at like a SIM and like a financial model, it just, it just makes businesses out to look like this well oiled, durable, freestanding thing that just runs. You're just buying it like it's a piece of land. And I looked in these businesses and it's not like there's anything bad happening, but it's like there's stuff all over the place. There's people coming and going. We're dealing with four different decision makers over three months because people are coming and going. And I just kind of got, I think it got this thought in my head of like, wow, this is just, I'm just worried that if I bought a business I would, and I wanted to get out of it, I would not be able to and it would be a really big bummer. Yeah.
- [38:58]
Kevin Moyer
And I think there's a lot of truth to that. So this is one and one we don't talk about very often. We'll often say buying a bad business is worse than buying no business at all, which is adjacent to this point. But this is a irreversible decision to buy a business, especially if you're going to finance the acquisition with an SBA loan, which so many people are. It's a, it's a really, really important point. We, we, we, we also talk about the failures when things don't go well financially or the business collapses, but we don't talk about as much. What if you just don't like it and it just kind of limps along. You're really saddled.
- [39:39]
Mahir
Yeah, I've heard it. I've heard stories like that. I've heard people say that and some people have said it explicitly, some haven't. But you just get the sense that this is just not an industry you want to be in. It's not a game you want to play. I think it's really hard to know that until you're deeply in it and you've already kind of gone through the one way door which like to get to starting a business like the two way door. I realized like we could just start something and if we decide that it's the right move to acquire, then we can just go acquire, then we can go make that irreversible decision. Once we have the information needed to make that decision with a ton of conviction and by the way, know the right diligence questions to ask. Probably have some industry connections be a more credible, you know, if we have, even if it's like a fledgling business, if in six months we decide to go do an acquisition, you know, I think we'll be more credible in the eyes of like the broker and the seller and we'll be able to speak the language. And the idea is like, I love the idea of eta. There's a reason I listen to your podcast so much. I think we can just go do that at some later point and preserve the optionality where if we just get in and we say we don't want to acquire, we just want to do organic growth or maybe there's a world where we franchise it out, there's a bunch of different paths that are open to us. And I think as we spend a couple of months working at it, the right path forward will become clear to us and we'll be able to do it with confidence that I don't think that I personally have right now sitting still kind of on the outskirts of.
- [41:05]
Kevin Moyer
The industry to drill down on this reversibility question, Kevin, the reason why buying a business is irreversible is, is because of the loan in the debt. Because if you compare it to starting a business from scratch, you build it up over a year or two, decide you don't like it, but you have employees, you have customers, you why is. And. And then you decide it's not making enough money or you just don't like it and you want to shut it down. Why is, why are you able to shut that one down so much more easily? Walk back through the door versus if you Buy someone's business purely because of the debt that you have to pay down.
- [41:44]
Mahir
I think that's the biggest part of it. Yeah, obviously you don't want to get to a point where you have a bunch of employees who are counting on you and customers and built up stuff to just shut it down. But I guess the idea is if you really had to, if that was the right financial decision for you, you could do it. I also think the lack of a significant amount of debt makes it so that there's a small version of this business that exists. Like the idea of trying to make something passive in the way that I talked about before, like one path for this new thing is it makes, you know, six figures a million dollars a year and does a little bit of profit and is as passive as it can possibly be. And then it goes in kind of like the same mental category for me as smash my trash and then maybe we move on to the next thing. And I think if you don't have debt to service and you don't have investors who need a return, you preserve that optionality to create something that's kind of intentionally small and passive and just kind of something else on the side. I hope it's not the case. I hope this is the big one, but it is an option for us.
- [42:45]
Will Smith
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- [44:08]
Kevin Moyer
This point about seeing behind the curtain in a lot of a lot of these small Businesses, your customers at Smash. In your article, you also talk about someone else's mess. What, What? Again, kind of an adjacent point, but speak directly to it.
- [44:23]
Mahir
Yeah, I think that the realization I've had from this is, this is partially from my customers, but partially from just talking to people in the space and going to conferences. I kind of realized that like again, you think you see a sim, you see a financial model, it looks like this thing that's just like part of the universe. But I think most businesses are just extensions of the owner and their lifestyle and their personality and their quirks. And the employees are people that they know. I think it's a lot. They're a lot more attached at the hip, the business and the person than it looks like on the outside in a lot of cases. And I think what that leads to in, as it relates to ETA is you just don't always know the right questions to ask. And I took a good look at a couple small businesses out here, a pool business, an online thing. And it's like, as you dig in deeper, it's just like I could see what could be going on here, but I have a feeling that there's 10 questions I need to ask that I'm not asking. Because this business is just entrenched in this person's life and maybe it will transfer. Great. Maybe the vendors and the employees and the customers will get along with me just fine, but maybe there's some unknown thing in there that I don't know to go pick out when I'm looking at this business.
- [45:34]
Kevin Moyer
Okay. And then the competition in eta, which, which we hear about all the time and yours truly contributes to. So you were, you were just also starting to feel that maybe the best window to do this was yesterday.
- [45:47]
Mahir
Maybe. I don't know. I think if you. I think it's just about trade offs. I think that there's. You could still do really well in ETA today. I just think that the trade offs you have to accept are slightly more extreme than they used to be. I think first of all, like I said, if you're somebody with a really great network and a finance background and you know how to diligence the hell out of a deal, then like, you can probably spot opportunities that others can't and you can go do that and ask the right diligence questions. I think it's possible with multiples where they are, you could just bring more equity. I think people could buy smaller. I think people could relax. Other, you know, typical search criteria like recurring revenue and things like that. It's just, where do you want to trade off? And I think what I realized about where I was is I am low risk appetite, high willingness to do grunt work, and capital to deploy. And like, that mix of things led me to maybe starting is the right move for me. But it was just those were the trade offs that I was willing to accept. I think, again, if you have a bunch of equity you can bring and you can pay the multiples that the market's currently demanding, great. I think it's no different than it was two years ago. I just think it was more the case a couple years ago that you could pay a more reasonable price for something if you wanted something. Kind of strike zone search, then you can now. And I'm not an investor, nor am I that financially savvy. This is just kind of a general feeling that I get from looking around at stuff.
- [47:14]
Kevin Moyer
But to be clear, you are in a position where you have the financial means now with your smash franchise to put more equity into a deal. So that actually arguably makes you a more competitive buyer if you're up against a lot of people who can bring only the bare minimum to a deal.
- [47:31]
Mahir
Yeah, I think I could have probably justified overpaying for something, but that's like. That gets me to the risk appetite. It's like, well, man, then you get into the whole logic about, well, is this, you know, is this going to be something where I totally miss something in diligence or to your point, like, am I even going to like this business? I don't know. And I don't know if I want to bet the farm when I have, you know, one kid, two kids on the way. And, you know, that was just me. I think if you have risk appetite, that's what gets you the great crazy returns. Maybe later in my career. Um, but for right now, I was down to just do the grunt work and start really, really small.
- [48:06]
Kevin Moyer
Evan, we haven't said exactly what the business is that you envision building. We should do that now.
- [48:12]
Mahir
Sure. So I guess just to tee it up. So I'm starting to look around. I'm looking at a business to start. I mentioned, like, you can start anything you want. That's one of the benefits of it for me. And so I decided on my two criteria, which were basically, I knew that I was going to have down days starting a business where, like, nothing happens. Like, phone hasn't rung today when we're talking, it's like 128. So I wanted to be sure that I have a Lot of conviction in what could happen. So the two criteria were massive growing market and dependable cash flows, not necessarily recurring revenue. And the niche that I kind of narrowed in on was I wanted a B2C market that I could tap into with B2B like distribution, so that I could, so that there was some path to a big business and it could happen relatively quickly. So rather than having to go B2C and like try to figure out the direct digital marketing channels, I wanted to have some sort of opportunity to do like these chunky growth step changes. So I looked at a couple businesses like that.
- [49:13]
Kevin Moyer
Wait a second. The product or service is B2C but via a B2B channel.
- [49:18]
Mahir
Right.
- [49:19]
Kevin Moyer
That's quite a nuance. And you'll, you'll elaborate on what that means. But first, why not then just go B2B? Why not have the business be B2B up and down and forget serving customers, consumers?
- [49:30]
Mahir
Yeah, yeah. Maybe it's just a simplistic way to look at it, but I saw B2C as really B2C was. It felt easier for me to feel good about the large, the, you know, the size of the market in a lot of B2C segments. And you could get a little bit more specific on how much you thought it was going to grow. The business we ended up choosing, which is going to be home accessibility for seniors. You know, there's really clear demographics around growth of that segment. So I was able to just be high conviction in the B2C market as the end user of what we're selling.
- [50:05]
Kevin Moyer
Okay, so. And, and then. So say what you were going to say before I interrupted you.
- [50:09]
Mahir
Yep. So I like the idea of a B2C market with B2B like distribution couple, you know, Another opportunity I looked at was waterproofing. So this idea that foundation companies go in, they repair a foundation, they get a call back in three months and they say you got to come back out and fix it for free under warranty. But the reason was that the, the, there was leakage, the foundation cracked again because there's water coming in. So I looked at like, okay, you could do waterproofing and sell through foundation repair companies and do like a referral play there. I looked at a couple other opportunities similar to that. The one that I landed on was this home access space. So I had this criteria in my head. This is where my business partner here enters the picture. He had mentioned this idea of doing home accessibility for seniors. And I'll just define what that means. So the basic idea is the population is Aging. The housing stock in the US is not built for, for people to age in place as it, as it said. So like, there's steps, there's, you know, elevation, there's all kinds of problems in the home. And the idea is that these home modifications are significantly more affordable than the alternative, which is a lot of time, you know, care or going to a nursing home or a facility of some sort. So he mentioned this idea to me much earlier in the year before. I kind of built these criteria in my head. And when I started really kind of chewing on these criteria, I called him back and I said, hey, I'm interested in exploring this. It seems to be exactly what I'm looking for. And we talked more about it. And I think the missing piece here that I'm not hitting on is the B2B distribution. A lot of these services are sold either through referral partners like hospitals, outpatient centers, rehab centers, or through something like the, the va. You know, if you're a veteran, you can get some of these things taken care of for free. So there's very much a B2B referral type play for this large and growing market. So I talked to me here, I told him, hey, I'm super excited about this. He had left his job in at a big consulting company and we said, hey, let's just start kind of putting one foot in front of the other on this. Let's start researching it. And one thing led to another and here we are.
- [52:19]
Kevin Moyer
So this B2B distribution point, I'm reminded of home care or home health care, where a lot of those businesses similarly are referred. They, they develop relationships with, I guess centers like those you just described and, and get referral business are referred customers that way.
- [52:36]
Mahir
Right. They also happen to be a referral partner for us as well.
- [52:39]
Kevin Moyer
Home care businesses. Yeah, yeah, naturally. So Mahir has this idea. You realize that it fits perfectly with the criteria that you had already come up with yourself. You guys decide to partner on it. Say, say something here about your, your the appeal of partnering, which is, was one of the other criteria that kind of emerged from this big decision.
- [53:02]
Mahir
Yeah, so I, you know, I have a silent partner. A buddy of mine kicked in some money for Smash My Trash. But I've been going solo and I was like explicit about. I love being solo because I can move quickly, I can kind of make the business however I want it to. I can build it in certain ways. I really like that. I thought I was going to continue doing that. And it also goes back to reversibility. Like Choosing a partner is an irreversible decision. It. It locks you to one path and I try to avoid that when I can. Me here brought this idea to me and we just started working on it, but it's worked out to become an awesome thing. I, I mean, first of all, he is great. He is like a super, to use the popular term, like the most high agency person I've ever met. He is super, super fun to work with. But also just like having a partner in general is a much more fun way to do it. I'd say it's more fun than the first year of doing Smash My Trash so far already for a number of reasons. One of which is that having a partner just, you know, there's inside jokes that you have. Like, there's. It's just making me play back a lot in my head of just like lonely days out on the road, going door to door, getting rejected over and over again. Like the slog is a lot more fun with the partners. One and two. I've just become very retroactively self conscious of how many bad decisions I made, especially around hiring, that I would not have made if there was somebody smart watching the same thing as me and like correcting my thinking, which we do for each other. Me here does that to me every day where I'll like declare something and he'll say, well, like, no, did you think about this? I'm like, no, I didn't. But man, I wish you were around two years ago when I was dealing with this problem with Smash My Trash. So it's been really great. I really like working with a partner in general and I think that has to do with me here in particular.
- [54:42]
Kevin Moyer
Yeah. Well, so this is a celebration of finding a good partner. But that, that has nothing to do with ETA or not. I mean, you might make the same argument for buying a business that do it partner. This is more just an evolution in your own kind of your own thoughts and feelings as a business person that you like doing it. You found with a good partner.
- [55:05]
Mahir
Yep. And I think it happens to be the case that he and I were excited about the same business and he was also excited about starting something for a lot of the reasons we talked about.
- [55:14]
Kevin Moyer
Yeah. And is he former tech?
- [55:17]
Mahir
No, he. He worked in entertainment, so he was, he worked at espn. He was a journalist. And then he got his MBA and he went to bcg.
- [55:27]
Kevin Moyer
Okay. Yeah.
- [55:28]
Mahir
Okay, great.
- [55:29]
Kevin Moyer
Predictable cash flow, recurring revenue. You said the appeal of the B2B distribution channel tie this in to how recurring revenue is overvalued a provocative statement for the ETA world.
- [55:42]
Mahir
Yeah, so I, I read. So one of my favorite podcasts that I've listened to of yours is with Johannes Hawk with the, the Turf company and he wrote something about this. I'm just basically taking his idea and just saying, yeah, this is great, I totally agree with it. So he's the one who came up with this is me just agreeing. Is the idea that it's not Recurring revenue is one way to achieve the thing that actually matters, which is dependable cash flows is probably the best and most reliable way to achieve dependable cash flows, but it's not like the only way. And because it's the default way, you end up having a couple problems with recurring revenue. I think in general, like if you're gonna buy a business that has recurring revenue, you overpay because everybody wants it. It's everybody's criteria. I also think it tends to be more competitive. Like pest control is recurring and it's very competitive because everybody wants that recurring revenue. So I read Johannes's article and I started thinking about like, well, what are other ways you could generate dependable cash flows without having recurring revenue? And I just think these referral channels that are really consistent and durable are a great way to do so. You know, it's never a sure thing. You're never going to be able to project like exactly what your revenue is going to be next month. But you can get pretty close. And that was a trade off that I was excited to accept. Just having this idea of a, of a constant channel that's running without necessarily having recurrence with my customers directly.
- [57:08]
Kevin Moyer
You're right. And it's. I, I know that article of Johannes's in, in his interview with Acquiring Minds. To your point, one of your favorites is a really, really strong one. He. So Johannes Hawk, everybody. Google that. The other good thing about the quality of your revenue is that it's a, it's driven by a natural process which is people aging and you know, needing accessibility in their homes. So it's, I, I guess you could argue it falls in the need to have category of service as opposed to something discretionary. So, so in that sense you could argue it's like H Vac or, or plumbing where stuff breaks inevitably. So there's always going to be, you know, a new cohort of, of users who are picking up the phone and needing your services. In the same way people are always aging. So, so there's just you, you can, you can rely on the demand there being constant and in Your case looking at demographics, know that actually the demand will swell. Yeah, great. Lastly, before we, we turn to a couple of points you made about what hasn't changed in your, in this evolution of yours. The complex businesses can be better than simple ones. We all prefer simple businesses. Boring businesses are simple businesses generally. But say more about set us up by why we should like simple businesses and then tear us down by actually why you're now drawn to complexity.
- [58:38]
Mahir
Yeah, it's basically my own. My own thought process was I loved Smash My Trash because it is a simple business. I have drivers that do the same exact thing every day. They deliver an incredibly straightforward value proposition. And it's just, it runs like clockwork. And so I was drawn when I was doing this whole kind of like haphazard search, if you even want to call it that, for my next thing. Simple business was at the top of my criteria. I wanted something simple. And I think what I realized is everybody wants a simple business. And so when I started to think about the trade offs, I was like, well, what if, what if complexity was a trade off? I was willing to accept this is a complex business, this one that we're working on. And what I've realized as we've, as we've gone along is that the complexity can be a feature because if you can get in there and actually kind of figure out what the different categories are that make it complex, there's just a larger surface area to optimize. There's just more axes on which we can compete, more ways that we can win, more ways that we could build, you know, strategies that, that help us out. Maybe it's exactly how we've figured out these referral channels. Maybe it's like really getting to the bottom of every single program that could pay for one of these services and formatting it into content and giving it to customers, maybe it's the way that we install and, or, sorry, the way that we hire installers. There's just so many different things. And when you think about it from the outside looking in, it feels overwhelming. But as we've gotten into it, we actually realized like each one of these things is something that we could win on if we figure it out. I should also say that there's people who have really great businesses in this space that have helped us tremendously. A guy in Chicago in particular, Frank's his name, he let us come out and spend a week just at his company. And he took our installer that we hired there for another week. And you get in there and it's like, okay, this is complex, but there are people who have not only figured it out, but have been willing to help us. And I think that's actually now one of the things that I'm most excited about is just getting my hands on why it's complex and figuring out how to make it all work together.
- [60:42]
Kevin Moyer
So, so complexity as moat you figuring these things out is. Is basically and systematizing them and refining them is in. Is. Is building equity in the business because it distances you from some would be competitor who's. Who's trying to get in the business to compete with you tomorrow.
- [60:59]
Mahir
That's right.
- [61:00]
Kevin Moyer
And, and let's get into the business a little bit. Kevin, now that you've said you've actually seen inside Frank's. Was it in Chicago?
- [61:07]
Mahir
Yeah.
- [61:08]
Kevin Moyer
So this is essentially a contracting business, a construction business. You're going in and you're doing a construction project where you're doing what like a, like a, an automate, a mechanic, an automated chair down the staircase. Give us a couple of example projects that you might do.
- [61:23]
Mahir
Exactly. So what you just said is, is a big one. So it's construction esque. I'd say the, the difference is it's most of the time it's like a three to four hour job. One of the big ones is a stairlift installation, which is the rail that runs along the stairs. A chair takes you up and down. That's one thing that we would do. Another thing that we would do is a ramp. So if your house is, you know, two steps up to get in and you're in a wheelchair, you need a ramp to get up. That's a very similar type of project where we can put one of those in in three to four hours. Grab bars and railings. So things you grab onto either in the bathroom or at the exit or entrance to the house are smaller ticket things that are a really quick job, but can be lead funnels into the bigger ticket items. Now there's a lot of companies that are doing this that actually are doing construction. They're doing bathroom remodels where they're turning the lip of the shower into a smooth one smooth floor that you can roll right into the shower. And it gets complex from there. People do all the way up to elevators, which maybe we'll do eventually. Right now we're really focusing on the installation type stuff. The things that we could go do and knock out in a half a day.
- [62:30]
Kevin Moyer
And so it's not construction in the sense that it's very, very light construction. Short projects. But when I think about complex, I mean, basically any general contracting business is. Is the managing of that complexity. So. So really any kind of project business is a complex business in. In the. In the way you're using the term. Right?
- [62:54]
Mahir
Yes. I would say to a lesser degree for us, at least where we are right now, because these things that we're installing, every house is different. Sure. But for the most part, it's a version of construction that's light enough that we're mostly. Our installers are doing the same thing every time. If you've put in one ramp, again, every house is going to be different, but you could probably put in a ramp at just about any house. Same goes for a stairlift, same goes for grab bars. So it's just one notch from like the true walk into a house and try to like remodel the kitchen. Level of complexity.
- [63:28]
Kevin Moyer
Great. And so there are already businesses who play in this niche. This is a niche.
- [63:34]
Mahir
Yes, that's correct.
- [63:35]
Kevin Moyer
Because I haven't heard about it and it makes all the sense to the world, but I haven't come across it in my, you know, in all of my hearing about all the different businesses that people are looking at. And so two people are searching for terms, the stair lift, I guess. And so you're bidding on stairlift installer near me sort of stuff.
- [63:56]
Mahir
That's right, yeah. So the goal again is to tap into the. These B2B channels. I mean, we launched as of this conversation about two weeks ago, so we are like brand new and we're doing all the direct to consumer. We're doing the Google, the Facebook, stuff like that, just to try to get leads directly to get the private pay side of the business going. And then over time we'll build these B2B relationships.
- [64:16]
Kevin Moyer
All right, Kevin, let's turn just to close out here to. To what hasn't changed. You had a couple of other really great themes that you highlighted that basically are kind of how you're thinking. You're. How you saw things a couple of years ago remains how you see it. Brute force is the first one. What did you mean by that?
- [64:37]
Mahir
Yeah, so I mentioned before, I think about how when I was looking at Smash My Trash, I think actually one of the few good insights that I had at the time was I wanted to find that straight line between me just doing work and value coming other side. I think as you become more of an investor versus an operator, if you think about it like a spectrum, I guess, you know, investors are making big decisions and, you know, the Value creation is whittling down to them just being experts at understanding things. Whereas on the other end of the spectrum, for somebody who's relatively novice and new in, in my entrepreneurial career, like I am, I am attracted to things where it's like put work in, get money out and then over time figure out ways to try to be smart about making decisions and investments once you have some unique insight. And I think this new project, this new company, Golden Home Access it's called by the way, is a version of that because we're going to be going out and trying to hustle and start the business and get it off the ground. Smash my trash was very much that way too. I talked to a lot of people who I think are in my similar shoes, like people I used to work with that you know, are thinking about doing something. And this is something that typically comes up where it's like there's opportunities out there to just convert work into money without feeling like you have to make a major investment or a major blind leap that might come back to bite you.
- [65:54]
Kevin Moyer
And that's because you could invest the effort which, which is what you're calling brute force.
- [65:59]
Mahir
Yeah, the sweat equity, the effort, the brute force, whatever you want to call it. The.
- [66:04]
Kevin Moyer
You had a little formula in this part of your article where you basically the three pillars of what you can do to make a, to make a business go to make an investment work is effort and capital and risk. So you can, you know, if you amplify your risk, then of course you know the downside is likelier. But so too is, is the return on investment. So effort times capital times risk. And so you're leaning into high effort because that's where you are in your career, in your life.
- [66:32]
Mahir
Yeah, exactly. I think it's kind of a progression. At least it will be for me. I'm not saying it should be for everybody, but to me it makes sense that you would start with effort type plays. I think another version of this is people who start agencies and then launch SaaS companies. It's very similar. It's start with just kind of like doing work, make money that way, then have capital that you can invest and then at that point you'll be experienced enough and smart enough about your industry that you can make decisions that might be risky for someone else. It might seem risky on the outside, but for you, because you've done the effort and the capital play, you have a unique insight that allows you to do really aggressive things like roll ups with, actually out with, without much risk. Because you know the questions task and you know how to go about it. So that's how I've thought about kind of sequencing out my career. And I think we're still in the effort chapter.
- [67:18]
Kevin Moyer
Yeah, well, it's a, it's also kind of the, the progression that we are, we're all pretty intuitively familiar with, which is at the kind of first rung, you're selling your time for money and you want to get beyond that rung as quickly as you can. Either sell your time for a lot more money, but eventually hopefully be you have your income be decoupled from the amount of time that you're putting in. And that's typically done by putting capital to work as opposed to putting. Just putting your. Your selling your hours.
- [67:50]
Mahir
Yep.
- [67:51]
Kevin Moyer
Binary outcomes. What are binary outcomes?
- [67:53]
Mahir
Yeah, so this is a Chris Kerner thing. I think you're familiar with him. He's a cool follower on Twitter and stuff. He talks about this with businesses. Like binary outcome businesses are businesses where the work is either done or not done. And I think another example would be tree removal, which he's got a business, he's got a business in. So this is the context where he usually talks about, he says the tree's either gone or it's not. Whereas something like, I guess to pick on like house painting or interior design, like there's an entire gradient of how well it could go and the customer may like it, they may not. That creates a lot of confusion and one star reviews and you going back to do work and calling angry customers. So this was something else that I thought about was just like a done or not done binary outcome business, which for the most part I think golden home access is playing in. You know, if we put in a stairlift and it works, then the stairlift works. And if you look at some of the businesses we admire in this space, it's all five star reviews. And I think it's because they're great businesses, but also because there is like just a really valuable binary outcome that you're delivering the. To our customers. You can now get up the stairs and you weren't able to before we got here today.
- [69:02]
Kevin Moyer
Yep, yep. I think it's tricky because one, you could argue that a construction project, you know, you guys are doing arguably some sort of like very, very light construction, widgetized construction even. Even. But it is basically, you know, making a physical modification to a space which, which you could say is, is construction. When we think about larger construction, you know, landscape construction or something in the backyard or, or Home building or something like that, they are notoriously not binary outcomes even though they are kind of constructiony. So I think, I think this also gets into the complexity versus simplicity. While the, you're, you're attracted to the complexity of this business, the, the actual, the actual feature that you're giving to your customer is a simple one, getting up stairs or, or down. And I think the simplicity of that means that there's less likely to be a tail to the job. I think that's a good way. A way I like also to think about this concept is like to what degree is there a tale to the work that you've done? And you want there to be as little tail as possible. So under the umbrella of construction businesses, some construction, a remodel of a kitchen is going to have a long tail. The customer is going to make the contractor come back six times and complain about this and complain about that. But in your case or in tree removal, there's not much of a tail because it's, it's such a, it's such a simple, deliverable, clean, deliverable binary as you said.
- [70:37]
Mahir
So it's a great way to put it. Really great way to put it. So I think it's like length of tail is one thing and the other thing is just likelihood of getting a happy customer to five star review because there's a narrower or a way different spectrum of outcomes. But yeah, the, the length of the tail is a great way to think about it.
- [70:54]
Kevin Moyer
Physical world businesses.
- [70:57]
Mahir
Yeah, I think this gets a lot of airtime. Boring businesses. People, people are interested in boring businesses right now for whatever reason. I think about it as physical world businesses are just fun. Like going. Having been somebody who worked at software companies where you're very abstracted away from like the actual value creation, you're dealing with software, you're dealing with like big companies that are buying it. So like go out and watch a guy who pays $700 to the trash company, watch his trash bill physically go down by way of our machine is just like a very satisfying thing to do. Like I walk around with a tape measure now with this new business. Like I don't, I've like never touched a tape measure in my life and now I'm like measuring stuff and like trying to figure out where this stuff is going to physically go. And like talking about tangible things that exist in the world is like, I've just found it to be really satisfying and just fun to work on. I don't know why exactly. I haven't really been able to articulate it to myself yet. But I think there's something really tangible about the value creation that is just fun and very appealing.
- [71:59]
Kevin Moyer
I've heard this before, Kevin, but it's usually from somebody who's already handy and already has an affinity for, you know, building stuff, using their hands, fixing stuff, tinkering. So I'm not sure I've heard it from somebody who, you know, who's, who's not. Doesn't know his way around a hammer.
- [72:14]
Mahir
Yeah, it's actually good at it. I just said I like it.
- [72:18]
Kevin Moyer
Yeah. No, but it's also encouraging to hear that the. You're getting into this construction or installation, home installation stuff, really not knowing the trade. I mean, you guys are, you're really learning it. And will you. So is that to say that you'll be doing the installations?
- [72:35]
Mahir
No, we're doing the assessments right now. We have an installer that we've hired. But what we've realized is like the assessments are not super straightforward. You have to. There's a lot you have to think about, like technically construction oriented stuff. So we're trying to insulate ourselves. We have insulated ourselves with, you know, advisor type people, including other people who run this type of business and their technicians that we're able to call on. We've also leaned heavily on our manufacturers who are really good and helpful at, you know, helping us troubleshoot stuff. But we are going to have to learn it. I mean, there's some degree of like construction and handiness that's going to come along with this. Yeah, yeah, we'll get there.
- [73:11]
Kevin Moyer
Frank in Chicago, how big is his business?
- [73:14]
Mahir
I don't know if you'd want me to say, but big enough that we want to emulate him.
- [73:19]
Kevin Moyer
Can you give, give us a sense of employees or even that? Would you rather not?
- [73:24]
Mahir
Yeah, I actually don't know the answer, to be honest. Somewhere between I'd say 40 and 60.
- [73:28]
Kevin Moyer
Okay. All right. Well, that, that does paint a picture. Good for Frank. So this, this is, this is. I'm really. I mean, like I said, this business makes all the sense of the world. I'm surprised I haven't come across it. It seems like a great, great opportunity.
- [73:40]
Mahir
Yeah, I mean, you know, relative to what you mentioned, like the, the grow, the tailwinds and the non discretionary nature that you get with plumbing and H vac. Relative to something like that, there's just a smaller tam, there's just a smaller addressable market. Sure. I suspect that's part of, is growing. We think it is pretty Niche. We're. Every day we work on it, I get more and more optimistic. I'm excited about it. And of course, there is the part of it too that doesn't always get talked about. Where we were in someone's house yesterday. And people are very, very appreciative of this. They send us long emails. We've gotten a couple long emails, just people thanking us and talking about our technician. It feels really good. It is like. It is a very nice thing to work on that people can't access their house or part of their house and you help them do it. That's a very cool part of this as well. That's worth mentioning.
- [74:28]
Kevin Moyer
Well, I'm glad you did. And I think we both missed the opportunity to mention that when you talked about the binary outcomes and how somebody couldn't get up the stairs and now they can. And we were thinking about that in the abstract way about how job to be done is now done and you get paid. Let's not forget that. Yeah, this has got to be incredibly gratifying work that somebody who's having a really hard time, they don't want to leave their house, they want to age in place and they're struggling to, you know, get up and down the steps that they used to bound up and down or, you know, have in a place they've lived for decades. It's got to be incredibly meaningful. So that's another big appeal to this business. I, I love that. That would be very motivating.
- [75:09]
Mahir
Yeah, it's very motivating. Very motivating to do good work. I mean, a guy yesterday, we put two grab bars in his shower and he said, I haven't showered in here in years. I'm going to be able to shower here today. And it's like, if you think about, like the gap between the simplicity of the solution and the outcome, installing two grab bars is very, very simple. It did not cost him that much, we didn't charge him that much. And now his shower is unlocked. He basically has a new shower that he wasn't able to use before. And so good people have been really thankful. We've gotten some really nice emails and I kind of want to just be like, can you please put that in a Google review? But thank you for the email, but a lot of good feedback so far.
- [75:42]
Kevin Moyer
I gotta say that this demographic is probably less inclined. They're probably hard to extract online. You know, go to Google, fill out.
- [75:48]
Mahir
This, how to make it as easy as possible. But right now we're just happy to take the thank yous.
- [75:53]
Kevin Moyer
Yeah, totally. The other thing I would just say when you talk about tam, it's always a good reminder for people when they think about, oh, but the market is smaller than plumbing or H Vac to. To use the. A word we keep using. It's a little binary. I think if you. If a market is big enough, is the question is the market big enough? Is the question not relative to necessarily H vac or plumbing or electrical? Because it's really more about the supply and demand, the supply demand imbalance than it is about size of market. Because sure, the H Vac is a way bigger market than a home accessibility.
- [76:32]
Will Smith
But there are also way more H.
- [76:34]
Kevin Moyer
Vac companies servicing it. So if you. So, so just because the market's bigger, if you launch H Vac business tomorrow, you would be, you know, beating up your. Your competitors are just killing each other to get every. For every lead. So. So TAM by itself doesn't tell us much. It's. It's TAM cross. How many players are in this market currently? And so if the market is underserved and there's more supply, more demand and supply, that's really the final analysis. Anything else, Kevin? We've hit on a lot of stuff. This has been just a great analysis. Anything else to say?
- [77:12]
Mahir
No, I think we covered it. We're super excited about Golden Home Access. Like I said, we're starting it so we can preserve our optionality. There's a world where we need a lot of capital and we raise it and we grow it. There's a world where we have the organic playbook down and we grow it that way. There's a world where we franchise it. There's a world where we keep it small, we grow geographically. So it's a very exciting time right now to think about all the different options we could go and try to analyze which is going to be the best, which we will have to decide. But I will say, relative to how I felt in the beginning of Smash My Trash, where I did have the debt and I did have this franchise agreement, I felt like the lion was chasing me and I was running away from it. This very much feels like running towards something exciting and doing so with a great partner has been really fun. It's just a very fun chapter of my career and I appreciate you having me on to talk about it.
- [78:02]
Kevin Moyer
Well, congratulations on going through a really fun period in your career. That's wonderful to hear. It doesn't escape my notice that it's also because you've got this passive business that's thrown off more than 200 grand a year. So you're also in a different financial position and you have all this great operational experience and you got a, you know, got a feather in your cap. So you're also just coming at this from a position of power that you were not when you started Smash My Trash. Not to diminish at all your enthusiasm, but you're in a very different. You've, it's been a very productive couple of years for you and you're in a very different station now. Fair.
- [78:36]
Mahir
Yeah, it been very fortunate in that way. And it does feel like it's paying off, which is nice. And I also just got to give a shout out to my wife who has a great job and is very supportive of the crazy stuff that I work on, which certainly helps. Certainly.
- [78:49]
Kevin Moyer
Great. Well, Kevin, you have said yes to doing a live Q and A with listeners to this episode. So we will share in the. I will have already said in the intro and in a few minutes in the outro exactly when we have that penciled for. And it'll be on the website and everywhere so people can come do that and ask you about Smash. Ask you about starting a quote, boring business from nothing. Asking you about getting a blue collar business. Passive. We covered many topics today, so I can imagine there being a lot of questions. Thank you for saying yes to that.
- [79:23]
Mahir
Yes, I'm excited for it.
- [79:24]
Kevin Moyer
Cool. And otherwise people can find you on LinkedIn and your substack will link to that as well. And we'll link to the. I mean you got a substack where you have a number of articles. We'll link to that. We'll also link to the the directly to the article that that caused me to reach out to you in the first place.
- [79:42]
Mahir
So sounds good.
- [79:43]
Kevin Moyer
Check all of that in the show. Notes, everybody. Kevin Moyer, thank you very much for coming on and in sharing with us what you're up to.
- [79:49]
Mahir
Thank you, Will.
- [79:51]
Will Smith
Hope you enjoyed that interview. Don't forget to subscribe to the Acquiring Minds newsletter. We send an email for every episode with an introduction to the interview, a.
- [80:01]
Kevin Moyer
Link to the video version on YouTube.
- [80:03]
Will Smith
And soon key takeaways, numbers and more essentials from the interview. For those of you who don't have.
- [80:11]
Kevin Moyer
Time to listen to or watch it, subscribe at acquiringminds.co.
- [80:16]
Will Smith
You'Ll also find all our webinars there on the website, both those we have coming up and recordings of past webinars. At this point There are over 30 webinar recordings, a wealth of information on all the technical nitty gritty of buying a business. Acquiringminds co.