Interviewer (3:10)

Notes Christian Bateson welcome to Acquiring Minds.

Christian Bateson (3:15)

Thank you for having me Christian.

Interviewer (3:17)

I'm excited for this interview because you are so excited about this path. The path of buying a business.

Christian Bateson (3:25)

Yep.

Interviewer (3:26)

I don't think it's an overstatement to say that Buying a business saved you from misery, so let's get right into it. Christian, please start us off with a little background on you.

Christian Bateson (3:37)

Sure. Yeah. So I'm one of eight kids. I grew up in a big family in southwestern New Mexico. Very much like a kind of blue collar upbringing, and worked a lot of crappy jobs in my teenage years. Worked on Farms for four bucks an hour in the 110 degree heat. And. And that was kind of the theme of my, you know, that's a theme that I think about a lot, is that everything that you've done in your life gives you perspective and gives you gratitude for what you have now. So anyway, we'll touch on that, various points. When I was 15, I got a scholarship to go to Phillips Academy, Andover, which is like, you know, the best high school in the country, basically. That was a big, life changing event for me. So I was this, you know, kind of redneck kid. Went to andover Mass in 1991. Then that opened the door for me to go to Dartmouth College. And, you know, that was. That was just sort of all great things happening to a small town boy.

Interviewer (4:37)

Christian, let me stop you. How'd you get that. How'd you get that, that scholarship to Andover?

Christian Bateson (4:42)

So I had one older sister. I'm the second oldest of eight kids. My older sister got a scholarship to go to a school in Connecticut. And it was just kind of like, you know, I come from a family of smart people. Both my dad's parents went to Stanford. And, you know, my parents took a different path, which took me out of these, you know, sort of coastal population centers where this thing is more comp. You know, where education is more valued. But, you know, we were growing, grew up in a small town. There was not a lot of educational opportunity there. So they encouraged her to go off to this other school and. And so then didn't work out for her. She came back after a year. But then I kind of was like, well, I want to try it. So I just, you know, I bought this guidebook, like the Guide to Secondary Schools. And my parents really wanted me to go to a Catholic school, all boys Catholic school. But none of those offered any scholarships. And Andover basically offered me a full ride, where not only they paid tuition, they paid to fly me to campus and home for, you know, Christmas and spring break and summer. They put money in my account every week just for, you know, sundry expenses. And so, yeah, I mean, it was incredible, you know, for. It was so different than anything I'd experienced or.

Interviewer (5:53)

Or that most people have experienced.

Christian Bateson (5:54)

Yeah, yeah, no, I know, but good for you.

Interviewer (5:56)

That's amazing.

Christian Bateson (5:57)

Yeah, well, so I was like living in a dorm, you know, at the age of 15, kind of could do whatever I wanted to. And I've always thrived on, you know, just kind of being very independent and more of a loner, you know, in a good way. Like, my sports were wrestling and tennis. You know, I was never a team sport guy. I don't have any partners or, you know, outside investors in my businesses now. I just kind of like to do it myself. So. So anyway. Yeah, yeah, so I was, I was, I was at Andover, I went to Dartmouth, I studied economics and I always wanted to be a business owner. I realize this now. I think back to this from a young age. I always wanted to own my own business. But then I kind of got seduced by the Wall street money. A lot of guys from my fraternity went to Wall street and I'd go to New York City for the weekend and hang out with them and see the life they were living. And it was a great way to get to entrepreneurial money without taking entrepreneurial risk. So I ended up doing that out of college. I did three years as an M and a analyst at Bear Stearns, which was a really, very, very useful experience in terms of analyzing and diligence in businesses. And so, you know, having that, that hard finance background is very, very useful. And, and I use it, you know, I use those skills to this day in running my businesses.

Interviewer (7:18)

We're gonna, we're, and we're gonna return to that theme. But Bear Stearns, in the aughts, I guess this was.

Christian Bateson (7:25)

Yeah. 99 to 2000. Well, so I did so well.

Interviewer (7:28)

Well ahead of 2008.

Christian Bateson (7:29)

Yeah. So I, well, I worked there for three years as an investment banking analyst and I took a year off. I had this crazy roommate and one of my best friends still who had this idea that we would do a year long around the world trip. So we spent a year planning this thing. We got a, a ticket from British Airways around the world desk. You basically pay by continent. So we did five continents. And after three years, we took our backpacks and traveled, you know, mostly Southern hemisphere, Africa, South America, you know, New Zealand, Australia, Southeast Asia. And that was amazing.

Interviewer (8:03)

What was the most, the place that most impacted you? I, I give top one off.

Christian Bateson (8:10)

Yeah, I mean, it's very, you know, like my top five are probably Thailand, South Africa, Australia, Italy and Spain. So those are, those are just. So anyway, I did this. I came back to New York and I Was crashing on my now wife then girlfriend's couch looking for a job, sort of casting about and I was networking and I still knew people at Bear Stearns. So that was how I ended up getting back on the, on the derivatives desk at Bear Stearns and you know, just kind of got, instead of going to business school, I got like a, a job that they would offer to someone with a newly minted mba. But I never went to business school. I traveled around the world for a year, so, so I did that job for five years and I got, was getting promoted. I was making good money, you know, for a guy in his late 20s, early 30s. I was making a lot of money and it was fun.

Interviewer (9:01)

What's a lot of money, Christian, if you don't mind?

Christian Bateson (9:03)

Like I made almost a million bucks in 2007 and I was 31 years old. Yeah.

Interviewer (9:08)

Wow. Yeah. And how, and how common or not is that?

Christian Bateson (9:12)

That was, that was pretty common. I mean the thing is like, you never know on Wall street how much anyone else is making, but it's a business where it's like tech, you can make a lot of money very young. It's not a seniority based business. It's really based, you know, it's, it's more of a meritocratic, you know, and it, you, you, you generate economic value and you get paid for it and you get paid sums of money which to most people seem seen. And so you, then you learn not to talk to people in your family for instance, or your, you know, whatever, your, your childhood friends about how much money you're paying because you get these looks and you're like, oh, I guess not everybody, you know, Christian, anybody outside.

Interviewer (9:52)

Of Manhattan finance, you can't exactly. I mean, those are obscene amounts of money. But go ahead.

Christian Bateson (9:58)

But there's always somebody making more than you. That's the funny thing you always hear about so and so, you know, who's, who's making more. So, you know, it's just, yeah, it's very much. It's an insular world and it's easy to rationalize that you're worth it. And you know, and it is a meritocracy. It was also a bubble.

Interviewer (10:12)

Right.

Christian Bateson (10:12)

And this is the, this is the, the unfortunate conclusion of that part of my career was that Bear Stearns went bankrupt. The firm was taking risk and basically borrowing short, lending long. They got in liquidity crisis and so I was asked to join JP Morgan for a cup of coffee. Basically six months. My boss and I were brought on board and they took all Our risks on board and figured out what they bought when my particular group. And then they fired us both. And so unceremoniously, in November 2008. So I was 32. I had a pregnant wife, pregnant with our first kid. There was really no bid for my job skills at that point.

Interviewer (10:57)

Christian, let me stop you. First of all, is the big short. How accurate is the big short, the movie, and, And. And the scene inside. Now, you weren't probably in. In the room with the CEO, but you might have a sense of. Of how accurate that was.

Christian Bateson (11:13)

I have a confession to make. I've never seen the movie. I've read all of Michael Lewis's books, including I just finished reading Going Infinite. But I'm much more of a book guy than a movie guy. People that. People, you know, like. Like Moneyball people. Like, I love that Moneyball movie. I'm like, I read the book. I don't know.

Interviewer (11:28)

Okay, but.

Christian Bateson (11:29)

But having read several accounts of Bear Stearns and Lehman Brothers, I mean. Yeah. So I don't know, maybe you could. You would have to describe the scene for me in the movie for me.

Interviewer (11:39)

We'll do that offline. Maybe it's worth 10 on YouTube. Yeah.

Christian Bateson (11:43)

Like, I was. I was sitting on a trading desk, right? So I had like four screens, and I have my Bloomberg terminal open, and I'm just watching the market basically crash. Like, I'm watching the meltdown. And I remember watching Goldman Sachs stock, and every tick, it was like down a dollar. Like, every time, like a tick would. It would repopulate the graph after every five seconds it was down like a dollar. And I'm like, this is it. Like, this is. You know, this is the. You know, this is the meltdown. And, you know, you were right.

Interviewer (12:12)

And it was there.

Christian Bateson (12:13)

I remember when Bruce Listman, who is the head of stock trading for all of Bear Stearns, climbed up on the trading desk and he was like, don't listen to the rumors. Just keep working. Keep calling your customers. And when the guy gets. It's like the opposite. You know, like when the guy says, all is calm and that we just knew it was over. So. And it was over.

Interviewer (12:33)

Yeah.

Christian Bateson (12:34)

So.

Interviewer (12:35)

Wow.

Christian Bateson (12:36)

Yeah, it was. It was time to live through. Yeah, it was.

Interviewer (12:39)

Well and well, except then you thought you had kind of landed that plane with your JP Morgan coffee, then offer, then job. But then they unceremonious, unceremoniously gave you the. You and your boss, the boot, your pregnant wife, and you finished by saying, no prospects for your particular skill set. How is this guy making A million bucks that the year the value you can't find value for your skills when you were flying so high just a.

Christian Bateson (13:08)

Year earlier, what we were doing was this very esoteric. We basically were levering up investors in fund of hedge funds by creating derivatives. So let's say you want to lever up to buy a house, you get a loan from the bank. But if you lever up to buy the to via a loan, there are certain tax implications. And if you lever up by buying an option, let's say an over the counter option or an over the counter swap, you get the leverage with better tax treatment. And so we were borrowing from the firm's like in house treasury at like LIBOR +50 or something and lending out at LIBOR +150, making 100 basis points spread. And we're doing that on a big number, so making a small amount on a really big number. And then after the subprime meltdown, it wasn't possible to borrow money basically for free and invest it in really illiquid assets. The world decided that wasn't a good thing. And that was what I knew how to do really well. And so all those desks and all those trades still existed, but firms stopped putting capital into it and as a result they were just sort of like in wind down mode. So okay. And you know, I interviewed for other jobs, but I mean you have to remember all the firms were cutting jobs then. You know, I remember interviewing a Bank of America, but then they bought Merrill. I mean it was just, it was just a bloodbath on Wall Street.

Interviewer (14:34)

Yeah.

Christian Bateson (14:35)

You know, so by the way, this.

Interviewer (14:38)

This esoteric product that you were selling or, or trade that you were offering. I recall, I think it was Warren Buffett who said that derivatives are weapons of mass destruction because they're hard to truly unpack where the value is. Was he talking about instruments like the one you were saying?

Christian Bateson (14:56)

He was talking about securitized products like cds, mbs, which, I mean that was at the root of the financial problem.

Interviewer (15:03)

The mortgage stuff.

Christian Bateson (15:05)

Yeah, yeah, yeah, yeah. So securitized products with underlyings being mortgages or loans or you know, other financial assets.

Will Smith (15:13)

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Interviewer (16:26)

Carry on.

Christian Bateson (16:27)

What do you do? So, so then I take some time. I travel. I go to Hong Kong and see my buddy, the guy I traveled around the world with. I came back, had to find a job. So I, I finally, finally found a seat at a firm called Imperial Capital, which is like a small, scrappy, distressed boutique. And they said, we'll make you a salesman. So I had no experience as a salesman. I had no experience trading any kind of, you know, distress, debt or, or anything like that. So, you know, that was very, very difficult. They basically put me on a draw where I was, I was, you know, like, we'll pay you minimum of $85,000 a year, and then if you earn above that, we'll pay you commission. And so it was just a commission job. And at one point, I was about to get fired because I wasn't doing any trades because I didn't have any customers, because I didn't know how to get customers, because nobody ever sat me down and said, this is how you do it. They just were kind of like, you know, look, either he'll figure it out or he'll blow himself up or he'll just go away. So I figured it out. You know, I kind of got to where I was making a decent living, you know, maybe, you know, 20, 25% of what I was making in 2007 and just grinding, you know, just grinding. Just like I developed grit through those 10 years. I did. I basically hated that job, but I did it for 10 years and, you know, supported my family and I learned how to sell. You know, I really learned how to sell. And, and more importantly, and this is like, you know, everything that's happened, like, I was very unhappy for a lot of years, you know, I mean, I, I felt like I have more sympathy than ever with, like, the child actor who, you know, makes it big at a young age, makes, it's the fun money and fame and then they fall off and like, it's almost better to never have had it, you know, I mean, I, I had made so much Money and had so much success at such a young age that to get back to reality, it was just. It was hard, you know.

Interviewer (18:22)

Yep.

Christian Bateson (18:23)

And.

Interviewer (18:23)

Yep.

Christian Bateson (18:23)

To work with people who were making a lot. You know, some of my colleagues just. Who had the good accounts, and they knew how to trade, they knew how to sell. They made a lot more money than I did. And I'm sitting here, like, you know, like, it just felt very unfair. But that. But that was kind of like the lesson that I needed to learn at that point in my life. Right. I mean, I wouldn't be where I am now if I hadn't had gotten slapped down by life and. And just had to kind of grind until I could get to the point to where I could see what the next move was.

Interviewer (18:52)

I can relate to this. Christian, on the thing about learning to sell. Is there. I'm sure that's a podcast unto itself, but was there a. An epiphany moment, or was it just gradual that you just got better at it little by little?

Christian Bateson (19:06)

Yeah.

Interviewer (19:07)

Is there anything you can share? What's that?

Christian Bateson (19:09)

No, I mean, it was just practice. I mean, it was just mostly learning by failure. You know, I always tell my kids, you learn more from failure than you do from success.

Interviewer (19:16)

Sure.

Christian Bateson (19:16)

I think you learn much more valuable lessons. And so, you know, I was sitting on a desk with guys all around me, and I could hear what they were doing, and I would emulate what they would do as much as anything. What I learned is that, you know, I'm not cut out to be a salesman. And. And my wife, when. When I first got the job offer, she said. She said, I. You said you were going to take this job as a salesman, and I was like, oh, this is not going to be good. And, you know, I. I did okay. I made a living. But, you know, a good salesman, when they get on the phone with their customer or when they're with their customer, is they make that person feel like they're the only person on earth and like, there's nothing more important than what that person is saying. I just can't do that. I just. I don't like people that much. I like some people a lot. But, you know, getting on the phone with someone every day and telling them about their weekend and whatever, like, I just. I don't know. I was just bad at it, you know?

Interviewer (20:09)

Okay. Yeah.

Christian Bateson (20:09)

So I had. I had a few customers who I. I had a really good relationship with, and they would. You know, they valued this. The. I pitch them ideas, whatever, and take them out, you Know, we go play golf and you know, we, I, I had a few good relationships but it was very hard. You know, it was a grind. Like some guys, you meet some guys and you're like, you're a natural born salesman, you kill it. And, and I was not that guy.

Interviewer (20:30)

So, you know, it's interesting, it sounds like what you think is a natural born salesman is in fact the kind of archetype that we think of. The charmer, the extrovert and that as I said, that's the archetype. But I, you know, you'll, you'll see now articles floating around online or whatever conversation online about how like you know, actually, you know, the next level salespeople are introverted or reserved. It's not what you think it is. It's not the, the glad hander and the back slapper. Any quick reaction to that?

Christian Bateson (20:59)

Well, yeah, I mean, I think it depends on. Yeah, I think, I think having that personality is definitely a useful tool to be a good salesman. But I think that, you know, that's not the, you know, that's not the, the whole picture. I mean, I don't know, you know. Yeah, I'll tell you there, some of the best salesmen on our desk were definitely not that glad handing kind of guy. They were just, you know, I think the, the one thing that they all have in common is that they, you have to be smart, you have to be, you have to really understand the product and what value you deliver to your customer. And that's about a lot more than just being a likable person, you know. Anyway, so we moved from New York, we got out of New York, we moved to Los Angeles and that was great in as much as, you know, I had a house and a yard and, but, but I was getting up at 3:30 in the morning every day and getting to work at 4. And so that made it, that, that brought up this whole other like, level of stress. Right. And perpetually underslept. I had little kids and we just felt like my wife and I just felt that we were sort of drowning in la. You know, it's, we were, we were house poor and you know, I had a, look, I had a lot of problems, I had a lot of substance problems and alcohol problems and you know, I was kind of like this, that was like the darkest hour of my life, you know, where I just, I couldn't see a way out of it. And I remember thinking, you know, I'm 40, if I could just grind for like another 20 years. Just put my head down and grind that I can retire. And, you know, like, I was like, being happy is not that important. You know, I mean, what's important is to do your duty and. And support for your families, provide for your family. And. And, you know, and so, like, I died a little bit inside, right?

Interviewer (22:51)

Yeah. And.

Christian Bateson (22:51)

And then that manifested itself in a lot of. Of other problems. So what's that?

Interviewer (22:58)

At home.

Christian Bateson (22:59)

At home, yeah, at home, yeah. But also, personally, like, I would go out with, you know, like, I. I remember I had a customer, and they had this. This customer event in Florida. They called it the Marble Gate Winter Classic, where they'd fly in their sales coverage and we'd, like, go play golf and, you know, go out and. On a big boozer. Right. Go. And so I got so hammered at this thing that I, like, passed out at the table. And another one of my competitors took pictures of me and sent them to my colleagues at work. Like, look at this. Look how he's behaving. And I remember at that same. That same time, that same day, another one of my competitors that was there as sales coverage, and he. And he asked me where I was. I said, oh, I'm an Imperial. And he was like, oh. Like, he was like, I'm sorry to hear that, or something like that. And I remember that it hurt. It hurt that, like. But I knew it at the same time, right? Like, I needed to hear someone else verbalize. That was the perception of this place. And it was a very toxic culture. You know, it was a very difficult place to. To work. So say more.

Interviewer (24:06)

Say more about that because you had shared some kind of. Watch what you witnessed. Your boss at that firm do has also taught you something important you've carried with you.

Christian Bateson (24:15)

Yeah, no, Yeah. I mean, we. I traded a big piece of bank debt, and there was, you know, look, the thing in. In the finance industry, it's all about money. And it's very easy to rationalize doing the wrong thing to get more money. And I saw my customer do that where they were trying to get information out of me about the identity of a seller of this piece of debt. And so I didn't tell them, but my. But it created this brouhaha at the end once my customer found out who the seller was because they were an insider. And so I was sort of in the middle of this, and I didn't. I mean, I knew that I had to just follow the rules and not disclose anything, but, you know, it was uncomfortable. So after they do this postmortem, my boss has the. It Guys listen to the recordings of my calls and they determine that, you know, something had been done wrong or that there was some plausible reason that, you know, that they didn't have to pay me the commission. So they didn't pay me the commission. And I mean, that money was life changing to me at that point in my life. Right. I had a. You know, I was struggling. I was just starting to make money. And he was like, I'm not, you know, we're not going to pay you, because xyz. And you know, it was a situation where the money made no difference to the owner of the firm, made all the difference to me. So.

Interviewer (25:40)

And so you thought he was just basically squeezing you on a technicality?

Christian Bateson (25:45)

Yeah, yeah. It was purely opportunistic. And there was no. I just felt it was unreasonable, you know.

Interviewer (25:51)

Yeah.

Christian Bateson (25:52)

To. To deprive me that. Of that money that I needed. So, look, I mean, I've. I've had phenomenal bosses and I've had terrible bosses, and I've learned plenty from both of them.

Interviewer (26:03)

And so would you learn from that guy? Don't be a dick.

Christian Bateson (26:09)

Yeah. Yeah, pretty much. We'll get into this later. But I consider myself above all a student of human nature. And. And that means understanding your own tendency to rationalize the wrong thing just as much as everyone else's, you know, and sort of realize when it's happening that you're. Oh, wait a minute, you know, like having perspective on. On, you know, and money. And nothing leads to rationalization of bad actions more than money does.

Interviewer (26:37)

So.

Christian Bateson (26:39)

So anyway, I'm in, you know, I'm grinding. I'm grinding and I'm unhappy. And then my good friend Ed Dugan sends me this, mentions to me one day that he's looking at buying this paintbrush business in New Jersey, which could get government contracts because it was domestic production of paintbrushes. So I'm like, what are you talking about? So he sends me a link to Biz Buy, Sell. And I. And I start looking at this business, and I. And then I start looking through Biz by Sell more and more and more and more. And I was like, holy. You can buy a small business for three times cash flow. Like what? Like, so. So to go back to the things I got out of that job for 10 years. When you're trading distressed debt, you're trading the loan of a company at 50 cents on the dollar. Something bad happened to that company. Your loan zone traded $0.50 on the dollar. Unless either management messed up, the market, turned against you. There was A technological change or some kind of secular shift, whatever. So, like, every day was an object lesson for me and what can go wrong in business? And so. And the other thing that I learned was that almost all these businesses that were trading at distressed levels had 8 to 10 times leverage on them. And so I just figured that, you know, if you're buying a business of any size, it's going to be, you know, trade for 8 to 10 times cash flows. So on biz, by seller, now I'm learning I can buy a liquor store in, you know, Aspen, Colorado, for three times cash flow, and I could pay myself $500,000 a year and live in Aspen. Like, oh, well, that's. So then I started looking at, you know, so then. So then, like, the world.

Interviewer (28:11)

By the way, you must have still been drinking at this point in your life.

Christian Bateson (28:14)

Don't worry. I never stopped that.

Interviewer (28:16)

Okay.

Christian Bateson (28:17)

But, you know, all things in moderation or more so. So. So then, you know, so then it was like, at that point, it was like, I know what I'm gonna do with the rest of my life. I'm gonna buy a business. And it was just a matter of, like, what business and where. So. Yeah. So then, as part of.

Interviewer (28:37)

Christian, did you have any hesitation about, like, these multiples seem too good to be true. There must be a catch. They must be crappy businesses that I must. You know, it must mean that, you know, I'm going to be working 80 hours a week at a liquor store. Like, you know, there must. Given how good the economics seemed to you compared to what you were used to seeing, they must have seemed a little bit too good to be true or. No.

Christian Bateson (29:03)

I mean, at that point, I was so miserable that I thought, you know, look, if I have to work 80 hours a week doing this thing that, you know, that is stressful, at least I'll be making money. At least, you know, because at that point, I was working really hard, but I wasn't actually. I was taking entrepreneurial level risk. I wasn't even making entrepreneurial level money. So it was kind of like all downside and no upside. Okay, so. No, I mean. But yeah, I mean, the. The as much as it was. It was like it was too good to be true. Right. But that's why the aha moment. That's why. Because I kept looking and I kept looking and seeing more and more and more of them, and I realized that there was something I just had been completely unaware of.

Interviewer (29:44)

So did Ed Dugan buy that paintbrush company? No.

Christian Bateson (29:47)

He's still grinding in the business. Like almost all the old timers that I, you know, worked with in High Yield, who I've told my story to, and they all say, you got balls and I'm happy for you and I'm just going to go sell some more bonds. So anyway.

Interviewer (30:01)

Well, good for you, Christian. Well, I guess, I guess what differentiated you from them was what, your aforementioned loner sensibilities or the depth of your misery?

Christian Bateson (30:12)

I've thought about that a lot. So, look, I had, I had an unconventional upbringing. You know, my parents moved around. We moved from Oregon to New Mexico. My dad did a bunch of different things. Like, my parents, they were, they were like Catholic hippies in the 1970s, right? And then they joined this group and they moved from Oregon to New Mexico. And they just never worried about money. They never worried about just, you know, like convention. I mean, they just said, you know, like the line, the line from the Bible, you know, it'd be like the flowers in the field, though. God takes care of them, whatever. And so I just think I always had some, like, different things in my youth and then, and then leaving to go away to boarding school, that was a huge risk, right? I mean, how many 15 year olds would leave New Mexico, go to Massachusetts? I didn't know a single person in Massachusetts. I just went there, kind of figured it out, you know, and, and so on and so forth. So. But, but yeah, let's be honest, I was very miserable. I, I was. I remember sitting on my, my desk looking out the window over, over Century City and just saying, it can't be worse than this, right? If I buy a business and it goes bankrupt and I have to file bankruptcy, like, I won't feel worse than I do now, so what the hell, you know, I have no downside.

Interviewer (31:26)

Yeah. Yeah, that's basically, exactly. That's basically a no downside kind of argument.

Will Smith (31:32)

Yeah.

Christian Bateson (31:32)

Yeah. Really?

Interviewer (31:33)

I mean, yeah, you were already, you were already at the bottom, so it couldn't, couldn't have, couldn't have sunk further. Okay, well, I love that because that's. I, I have said about buying a business, I said it in a recent episode, that one of my favorite features of this path is that when, for a lot of people, including yours truly, when, when you feel stuck, this is a, this can, this path can be a way out of feeling stuck. And it's, and it's part of the reason why I like to evangelize it, because it, it is not one that's obvious. It's becoming more and more known, but it certainly Isn't, wasn't obvious to you. Wasn't obvious to me. And yet when you, when you stumble upon it, it just, it's like the universe cracks open and all this light shines and you're like, wow, look at all the possibilities here. Not easy, Lots of pitfalls. Everybody, not saying, not saying everybody does this is successful and gets rich. But it's, it's pretty compelling and you're gonna, you're gonna be proof positive of that. Carry on.

Christian Bateson (32:38)

Okay, so my wife and I decided we're gonna leave la. We had, we ran a process, we ended up in Atlanta, Georgia. So I will say that there are certain places where it's easier to do business as a small business and Georgia is definitely one of them and California is not one of them. So, you know, I think it matters a lot specifically for certain types of businesses. So we moved here. You know, the cost of living is much lower. It just takes the pressure off. Right. When your mortgage is not $10,000, it's $3,000. You don't have to start working and earning money right away. So basically took a year, looked at a bunch of businesses. I looked at a tree service business that was doing $303 million of revenue, about a million dollars of EBITDA, put in an LOI and flew out here and met the guy and it was a fast growth story, which gave me pause. And you know, he had a good digital marketing apparatus, but still, you know, I was, I was nervous about paying full, you know, full boat for a fast growing business. So somebody else bought that business. He ended up getting recapped. He still had to stay in and manage it, but he took some money out of it. Then I looked at a landscape business. I'm sort of mowing blow and new design install. That guy was waiting on another buyer to come and put a bid and I just got tired of waiting. And you know, I met the guy for lunch, got kind of a weird feeling and just kind of was like, no, this is not the one for me. Along the way I was signing lots of NDAs, I was looking at lots of businesses. Not as much talking to owners, but talking to brokers, all on biz by sell. So, you know, I didn't do the outreach. I know a lot of people do the, you know, create a website and call on business owners. And I think that that works very well for some people and I think it probably worked great for me. It's just the way my journey happened. You know, I, I was, you know, I found my, my business On Biz by Sell.

Interviewer (34:45)

And you weren't other, other than Ed Dugan putting this in front of you, you weren't plugged into the ETA search community. Tuck being. Being Dartmouth's business school. You had no connection there. And to, to. Yeah, okay, yeah. So you're doing this as a loner, as a self described loner.

Christian Bateson (35:01)

So someone had mentioned to me that Harvard Business Review had written this book about how to, how to buy a small business. So I, I listened to the audiobook of that and it seemed just very self evident, you know, again, it was like everything came back to that aha moment that I had on Biz by Sell. Like, you know, so every, every subsequent fact I got from the audiobook, et cetera, just sort of re. You know, reinforced that and nothing contradicted it. So anyway, I found On Biz by Sell this business that I ended up buying that had been started in 1999. So it was at that point a 20 year old business that was cleaning new construction. So come in at the end of large commercial construction projects and clean everything up before it gets turned over to the owner. And the guy had started it and made a lot of money and bought himself a home in Charleston on the water. And he was out on his boat all the time. So he was sort of tired of coming back and forth to Atlanta every weekend to go back to work and had his brother running it for him. So then the brother was like, oh, my brother's making all this money, maybe I'll do that. So the brother had started a business and so, you know, had said, I'm, I need to be. I'm not going to run this for you anymore. So I met, I met Gavin McCormick. He was the guy who started it. My business is called Resolute Construction Cleanup Services. And, you know, good interaction. We had a, we had a difference of price. He wanted 2 million bucks for the business, which would be 1.5 million for the enterprise, plus 500,000 for the accounts receivable. The business was doing about $500,000 of cash flow. So it would have been three times for the business plus another turn for the arm. And I just said, like, I'll just pay you a million and a half. And I want the AR to travel with the business and just to back up a little bit. When I was deciding what kind of business I wanted to buy, I had a certain criteria which were informed by my experience trading distressed debt. So I was like always thinking about the downside, right? Like, what's a business that can go Bust and how to stay away from that kind of a business. So like, I didn't want anything technology related because I don't understand technology and technology can change quickly. I didn't want anything retail because I just saw how Amazon had like devastated small, you know, retail businesses. I didn't want any kind of a bad lifestyle where I was going to be getting up early or staying there late. You know, I wanted like regular daytime hours. And then I wanted something where I could be physically active and be involved in it, where it wasn't just a desk thing. So that's why I was drawn to like the tree service business. Like I could see myself learning to climb trees and getting up there with a chainsaw if my guy was hungover and didn't show up. Or I could see myself, you know, out there walking someone's property with them and because I love flowers, I love gardening and, and all that stuff.

Interviewer (37:56)

So why did you want something physical after a career behind a desk? Precisely because you'd had a career behind a desk and you wanted to change or what?

Christian Bateson (38:04)

Yeah, I mean, I'm an outdoors guy. Like, okay, I love camping and being out in the mountains and you know, here I was in New York and LA for 20 years, kind of just, you know, in the biggest cities in America. So I just, you know, I really wanted something that would get me outside more. So now, now I play golf instead. But anyway, we'll get to that. So. So yeah, so I, so I had found this bit. So. So all those criteria really gravitated towards service businesses.

Interviewer (38:31)

Right?

Christian Bateson (38:31)

You have, you want a stable business that involves managing people, managing customers and managing employees, not managing technology, not managing inventory or capital, but just dealing with people all the time, which is difficult and you get paid well for it. You know, those service businesses tend to have high margins, they tend to be more stable. So I give the guy my bid 1 1/2 million and we negotiated over the course of, you know, six months. And this is one thing that, like, one thing that I really like about biz Buy Sell or about broker inbound broker inquiry in general is that you have someone who's told you they're a seller of their business. Yeah, and this, and this goes back to when I was trading bonds. And something that I learned in my previous job is in a negotiation, if you have the leverage, you're much more likely to come to a favorable economic, economic outcome. So I'll give you an example from the world of bond trading. If a guy is short bonds and they're going up, he has a short squeeze. He is losing money. With every dollar the bonds go up. So he will almost always pay the price to buy the bonds rather than sit there and negotiate. So in other words, you know, if someone's covering a short, that they're just going to buy more aggressively than someone who's deciding whether to be a buyer or not. So.

Interviewer (39:54)

Yep.

Christian Bateson (39:54)

Anyway, so in the case of business, you know, I knew this guy Scott was a seller. He had been listed, he had listed the business probably six months before I met him. And there was no other buyer. Right. So I know, I'm the buyer. I know that if I keep repeating my price, he's going to come down to my price. And that's exactly what happened. I mean, I, I didn't know that, but I, you know, it seemed reasonable and, and that's the way it played out.

Interviewer (40:18)

So, Christian, that is all well and good, except that, you know, you do have something of your own timeline to. Excuse me, Runway that he may have perceived, which is you're unemployed, you're not getting a paycheck, and so that you can't hold out forever and ever. Maybe you had enough savings that you could comfortably hold out for a long time. But care to address that? Because a lot of people listening, you know, having a pretty tight, well defined Runway is a feature of a lot of people search. They can't just kind of search indefinitely. So they don't feel like they just have the I can wait out a negotiation sort of leverage that you seem to have had.

Christian Bateson (40:56)

No, and in fact, I, I think that most people I look at like private equity firms, right? They have a seven year fund, they have to invest all the money and then sell and be out in seven years. You get a lot of bad outcomes when you have a defined time frame. And I mean, that's just something that I know some people have. As I continue to buy my businesses, I just am always in watching and waiting mode. But I would never want to, you know, commit myself to a time frame because you're just, it's just that much more likely to like, you know, have a unfavorable outcome. But okay, in my, in my own case, yeah, my wife was working full time. You know, we, we sold our house in LA and done well on that. So I mean, we were pretty liquid and we moved here. The cost of living was much lower. So I felt like no financial pressure at all. If anything, it was just eagerness, you know, like, I see this thing, I want to do it, and I'm not The most patient person. So.

Interviewer (41:52)

And Christian, what of. In your assessment of the business and risks and you know, your, your, your years of training to fixate on downside construction being tied. Sounds like you were tied to new construction, multi, multi family construction or also commercial also. Excuse me, office. Any kind of building. Any kind of.

Christian Bateson (42:11)

Yeah. So we're on a number of big jobs right now. One of them is the biggest one's a data center. Actually. We clean data centers, we clean warehouses. So, yeah, so we've sort of pivoted from, you know, there's not a lot of new offices going up now. It's, it's a lot more. But people are still moving to Georgia and they need a place to live. And that goes back to what I was talking about, jurisdictions to do business in. If you're in a place where people are moving, like Texas or, or Georgia or Tennessee, it just makes it that much easier in a service business because there's always new people that need places to live. They need a new cleaning lady, they need to find someone to come mow their lawn. You know, they need whatever, you know, they need a place to board their dog. So if you're in a growing, a secular growth story, it just makes it easier.

Interviewer (42:55)

Well, and so is that how you. So what I was going to say is just being tied to construction is, is by reputation very cyclical.

Christian Bateson (43:05)

Yes.

Interviewer (43:05)

And so how. So that's a weakness when you're, when you're characterizing a business. Did you overcome that with what you just said that basically Atlanta is, has a long term secular trend of growth?

Christian Bateson (43:18)

Yeah, I mean, I think the number one way that I addressed it was with price that, you know, if I'm paying three times cash flow for this thing and if the business declines by 25 or 30%, which it will get to that. But it did, but, you know, it still generates enough cash to cover the debt, to service the debt and you know, and to pay me. And then, you know, everything else is additional. Additional delivering or additional generation of cash is, is sort of gravy. But yeah, I had this conversation with a number of people about construction. You know, it is more cyclical. But I talked to the owner of the business and he, I mean, I think he was honest with me. I just said, what happened here in 2008, 2009, what happened to your business? And he said, yeah, it slowed down, but it didn't slow down like it did other places because people are always moving here. And you know that there's just a, there's just A big sort of like it helps that the government of Georgia, whether it's at the state level, at the, at the local levels, is very pro development. All, all governments of Georgia are very pro development. They want to, whether it's Republican, Democrat, whatever, they want to grow the tax base, they want construction, they want, you know, economic growth. And so, you know, I think, look, I think if I live in, if I had bought a construction cleaning business in, in New York or California, I might be, I probably would be singing a very different tune. So maybe I've just been lucky, you know.

Interviewer (44:43)

Yeah.

Christian Bateson (44:44)

And.

Interviewer (44:45)

Well, I just want to call out a recent interview that will have aired a couple weeks but prior to this one with Alan Lockridge who bought a hardscaping business and in Charlotte. Outside or in Charlotte? Outside Charlotte and said the very same thing, you know, when I asked him about because residential construction project based construction, people's backyards would be one that people would be searchers might be very wary of. And his point was that one of the ways that he was comfortable with it is that North Carolina continues to see a lot of growth similar to, similar to your neck of the woods. So two recent guests saying the same thing, you know.

Will Smith (45:25)

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Christian Bateson (46:40)

So we negotiate. I made a mistake initially. I decided I was going to do an asset purchase instead of a stock purchase because that's what people said. And so I was down the road with a law firm. We had an asset purchase agreement drafted and then as I was sort of simultaneously doing my due diligence and understanding the business, I realized that Resolute had large contracts with very large general contractors that in some cases have been doing business with Resolute for 20 years. And they knew Resolute. And if Christian Bateson, former Wall street guy, shows up and says, oh, I own Resolute now, but I have a different name, will you novate this contract over to me? Then their first question is going to be, well, who are you and what do you know about construction cleaning? To which I would have to answer, I don't know anything. And then they would say, actually, no, we're not going to do that. Or there was a material chance they would do that. Right, that's what I would say. I would at least be asking questions and maybe trying to change the contract, you know, get a little squeeze, a little extra out of Christian Bates. And so about halfway through my process, I was like, I'm going to have to do a stock purchase. Or I decided that the greater risk was not to do a stock purchase, even though it's going to, you know, cost me more time and money and etc. So. And that there was some risk of like legacy liabilities that come with a stock purchase. But anyway, we switched over to a stock purchase and we closed the deal finally about six months after I signed an ally. And as of tomorrow, it will be five years exactly since I closed on my purchase of Resolute.

Interviewer (48:13)

Skipping ahead. And then we'll, and then we'll rewind back into the story. How's it going?

Christian Bateson (48:19)

It's, it's much better than I would have expected. I, I have a, I have a friend, a friend of a friend who gave me a great piece of advice before I bought, which is that he said you can always, you will always tend to overestimate how much change you can effect in one year and underestimate how much you can effect in five years because of the compounding effect of doing things the right way. It just takes time. So, yeah, at the five year mark, we're like 4x our revenues in 2018, this current year.

Interviewer (48:55)

Great. So, short answer is it's going really well and I want to spend some time there. So let me put a pin in that, but let me just close the loop here on your deal. $500,000 in SDE, he wanted 3X plus the 500 in AR. And you talked him down to no. You know, the AR is, is basically going to be your working capital. So you said, no, I'll just give you 3x basically for, for the business. You waited him out. He said, yes. The revenue of that point. Did you tell us what the revenue.

Will Smith (49:26)

Was of the business?

Christian Bateson (49:27)

It was, it was about two and a half billion in 2018.

Interviewer (49:31)

Okay, so it's a 20 margin. Yeah, two and a half million. Yeah. Right.

Christian Bateson (49:34)

Yep.

Interviewer (49:35)

And what did your, what did your deal terms look like? Sba.

Christian Bateson (49:43)

Sba? Yeah. So I, I didn't have any outside money. I just, you know, basically back to that theme of being a loaner. I, you know, didn't have any, any partners or anything. SBA. I did a 10 year SBA at prime plus two and a half, which at that point was like 8%. Now it's 11%. And so you put a lot of.

Interviewer (50:04)

Equity in, as I recall.

Christian Bateson (50:05)

I put, I put like 411,000 of equity in. The loan was 1.24 million. And this was one and a half million to him. And then there was some fees, et cetera. I think I had a $50,000 holdback for accounts receivable because I did buy 500,000 of accounts receivable for him. So I had a holdback on the deal price to him, which was held in escrow for a year. All the accounts receivable ended up paying. And so, and there was, you know, there's never been any legacy issues to, that needed to be addressed by holdback or any of the reps and warranties.

Interviewer (50:42)

Excellent. And when you said the equity that you put in, what percentage was that?

Christian Bateson (50:47)

It was about a little under 30%. 25 to 30%.

Interviewer (50:54)

Okay. Which is, which is going to be a little bit bigger than, than many people listening will do. Or your typical SBA purchase was that just to give you more room, less, less onerous debt payments?

Christian Bateson (51:05)

Yeah. I mean, so a lot of sba.

Interviewer (51:07)

Because you could basically, you, I mean, you had the balance sheet to, to afford it sort of thing.

Christian Bateson (51:11)

Right. I mean, a few things. So first of all, from the get go, I was just always, always about the thinking about the downside, which I've said before, and, and trying to be as, as to de. Risk as much as possible proactively. But an SBA lender is going to look again at Christian Basin and say, why should we lend you money to run a construction cleaning business? You're a finance guy, you know, like. And so I, I, it helped a lot to get the deal underwritten to have that extra, you know, extra equity in it. And there's obviously other ways to address that. Like, they said you could bring in a partner who owns 20% and they have, you know, actual direct experience, but I didn't want to do that.

Interviewer (51:54)

So you said something to me in the pre call about there being a lot of SBA lenders out there. And that's something to. To keep in mind.

Christian Bateson (52:02)

What did you mean when I was sort of negotiating this deal and I was just sort of networking people, advisors, you know, lawyers, accountants and lenders. And the lawyer who I ended up working with referred me to an SBA lender and that guy. And there was. There was a difference of opinion in terms of what should be in the collateral. And he. There were some assets in my wife's name. And my wife was very, very uncomfortable with this whole thing. Like, all these years that I'm miserable in la, she's like, just suck it up and don't be a bitch. Like, go to work. And like, she, she. She's like, you're not taking financial risk. You're not putting our family at risk. You're not giving a personal guarantee. Just suck it up. Like, yeah, you're unhappy. That's life, right? The drinking shin, like, so much. But anyway, so, so, so as part of our negotiation to get to be able to buy this business, she was like, you know, I can't have all of our assets be collateral for this personal guarantee for this loan. So I said, okay, well, this is in your name. And I made it a sticking point with this guy that, you know, look, this loans well covered by my stocks. Buy my bonds, buy my home equity, buy my cash, whatever. This is my wife's, and it's not in. In as part of the deal. And he was like, no, it has to be. So I have this buddy, Tim Clark, who is. He's actually the guy that got me on search funder.com initially, but I was like, tim, what? And he. He was like my rabbi through the whole process. Like, he started buying businesses in 2004, and, and. And I caught up recently, and he's just, you know, he's done. He's done very well.

Interviewer (53:36)

So gotta get him on the pod here.

Christian Bateson (53:38)

Yeah, yeah. So anyway, I call Tim and I'm like, explain the situation. And he's. He's like, dude, screw that guy. If he doesn't want to give you the terms that you need, find another lender. He's like, there's a. There's a thousand lenders out there that want to do business with you. They don't get to dictate the terms to you. If someone's trying to dictate terms and that's not the terms you want, then find somebody else. So it turned out the selling broker on the business that I bought had already sort of had it soft underwritten with Another SBA lender where he had a personal relationship, and that's how I ended up using to, you know, for the financing for my deal.

Interviewer (54:14)

Great. So takeaway is, as Tim Clark put it, there are a lot of SBA lenders out there, and they all work for a bank who's, you know, boards or advisory committees or whatever. I don't know the right language. Decide on various criteria, various types of loans they're willing to underwrite, and, you know, what their various thresholds are and what's required, what's not. And it. There is a lot of variety across. Across this universe of SBA lenders. So don't assume that the answer that you're getting from lender A is going to be the same that you're getting from B, from B, C and D. Yep, absolutely. Let's now turn to the. What you've done in these five years. So I said we would return to it. It's gone. Well, maybe, but maybe give us a picture of, say, you know, the transition year one, how did it go initially? And then let's zoom out and hear kind of how the entire project has been.

Christian Bateson (55:08)

Yep. So year one was great. I mean, it was definitely drinking from a fire hose, just learning all the people, all the who does what, and this customer and that. It's just a massive amount of knowledge to assimilate. None of it's very complex. But, you know, I had the guy, the brother of the owner, I had him on payroll for three months, and I was in his hip pocket just learning. And. And then I started kind of going out and doing it on my own. After two months, I was basically doing everything on my own. And I would pop my head and ask him questions, and, I mean, I just can't. I just still, to this day, I get excited thinking about just, like, how empowering it was. And the way I would describe it to people was that when you have a boss and your boss tells you to do something and you don't want to do it, you think it's stupid. You don't, and you're tired of explaining to the boss why it's stupid, so you just do it. But you die just a little bit inside. You just die.

Interviewer (56:03)

Right?

Christian Bateson (56:04)

And, like, that part of you, like. And I was like, I never feel that way anymore. If I'm gonna do something, I do it like 100% A plus Christian Bateson style, or I just say I'm not doing it, you know, and either. Either is a good. Is a good choice. Right. And so you get so much agency in your life. It's, it starts out professionally, but then it starts to, at least for me, it starts to manifest in all these other ways in your life where you're like, the way that I run my business is the way that I try and do all the things that I do. So anyway, 2019 was a great year. We made money. Um, in fact, we, we started, we got so busy that our a hundred thousand dollars cash in the bank was insufficient because there was a mismatch between me writing checks to my employees every month, every week, and me getting paid by my customers after the 60, 90 days. So my accounts receivable went from like 500,000 to almost 900,000. And I had to go to my wife and say, honey, we need to put more money into the business because it's doing so well. And that was, she wasn't very happy about that. So we sold some stocks and we took some money out of this and that and you know, it was, it was great. We were off to the races. Then Covid hit and all of a sudden construction basically ceased. So now I have, you know, 35 employees who like don't have jobs and are calling me and you know, it was. So that was very, very difficult. The good news is that all of our accounts receivable that had ballooned all turned into cash. And so I went from, I had a bunch of money in the bank all of a sudden, which was a good feeling in a time of extreme uncertainty.

Interviewer (57:47)

But you still got to be payroll.

Christian Bateson (57:49)

Well, I mean, if we're not working, then people aren't working. They aren't getting paid. Right. So I mean, that's one of the benefits of this business is that the, the variable costs is almost all, I mean like labor is 90% of my cost, you know, or higher than 90%. So my customers don't want me cleaning construction. Then no one's working. And you know, I mean, it was, it was very disruptive and I think less so here than maybe some places, but still, I mean, because of the types of jobs we were doing. So if you're cleaning, you know, a high rise, a high rise office building, the outside skin of that building with like the curtain wall isn't like, they're not like going to the local glass store and buying glass and bolting it on. These are pre manufactured components manufactured in China at mass scale and shipped all over the world. So when the supply chain gets disrupted and shut down, that means that construction basically stops. And so you may have a contract and they May have a timeline to get the cleaning of that curtain wall done. But, you know, when the ships don't come to port, then everything just, everything just got very delayed. So 20, 2020, our revenue was down, you know, 30% versus 2019. That was very stressful. Got some SBA money or some, some PPP money. And there was also SBA assistance for people with SBA loans. And then 2020, it started to come back. 2021 started to come back more. 2022 started to come back even more. And then last year, you know, we were up 70% over 2022. And this year we'll be up, you know, basically double what we were last year. So.

Interviewer (59:32)

Phenomenal. Can you, can you put some, some specific numbers behind?

Christian Bateson (59:36)

Yeah, so last year we did like 3.75 million of revenue. And I'm going to become a material taxpayer for the first time in my business's life because we had, you know, we had all these amortization, amortization of goodwill as well as NOLs. And so that's all kind of going to work through the system this year. And I'll be writing some tax checks.

Interviewer (60:02)

Christian, give us more on that. Give us the what you assume somebody doesn't understand what any of that meant.

Christian Bateson (60:08)

So I bought the business for one and a half million. Okay. Of that one and a half million, 500,000 was accounts receivable. So there was basically a million dollars of goodwill. Goodwill is just the value of the business, not. That's not a hard asset. So you can, if you buy a business, you can amortize that over 15 years. So that's, I think $67,000 a year, call it. That goes against your, you know, your pre tax profit. And then, you know, we switched from book accounting to cash accounting. And so if you're a growing business, cash accounting gives you better tax treatment because you basically, to the extent that you're. Because your revenue is based on money that comes in the door. So because we've been growing, I've had more money going out the door relative to the amount of money coming in because I'm writing checks on like a weekly basis and I'm getting paid, you know, 60 to 90 days later. So those have been a couple of things that have helped.

Interviewer (61:11)

And so. So why that? Yes, that was great. Thank you. But going back to the. Now you're going to have to start paying taxes. Yeah. Why at your. Whatever this is going to be, I guess, year six. I thought you just. I think the big tax benefit is the amortization of the goodwill, the million dollars over 15 years. So why is your six significant? I missed that.

Christian Bateson (61:31)

It's, it's just, it's, it's not necessarily, it's just has to do with the magnitude of the pre tax income that we generated last year and that we will generate this year. Because the business is so like if my, you know, my salary. So I have, I have my employees who are frontline workers and I have me and the other office staff and then I have rent and insurance and all that other stuff. And this latter bucket, which are sort of my fixed costs have been pretty stable. But now our revenues have gone up so much above that that it's created this excess, you know, sort of cash flow excess pre tax product. And we haven't done our 2023 tax return yet.

Interviewer (62:06)

Great, so you were at 3.75 million in last year. 2023, yeah. And, and just let me just do the numbers for everybody again. So you buy it's two and a half million the year before you bought it, which was 202017 numbers. I guess. 2018, 2018 numbers. Then it dips down to 1.7 million in 2020. Covid. So you said that was about a 30% decline. And, and then by the end of last year it's, by last year it's come back up to 3.75 million. Looking good. And then this year you're projected to.

Christian Bateson (62:37)

Do what probably about seven and a half million.

Interviewer (62:41)

And where is all that coming from? How are you doubling like that?

Christian Bateson (62:43)

We got, we basically won. Like you think about, you know, the guy, the old man in the sea where the old man like hooks the enormous marlin and now he's like, oh shit. Like how do I, how do I, how do I keep this online? So we won this enormous contract. That's the game changer. It's to keep a data center clean. You know, normally construction, if you go on a commercial construction site, it's trashed. And we come in at the end and we get it looking amazing. Right. And it might be trashed for two years. Well, this job, they want to keep it looking amazing for the entire two years. So this company has bought out the, basically a small army of cleaners to keep this data center looking really, really good throughout the entirety of the construction. And we've never worked with this customer before. They're you know, a really big contractor that does really big jobs. And you know, we, we want it, we started it at the end of November, so we're three months in now. It's going great. It's been very difficult. So, you know, this, this whole thing about stable businesses that all these, these HBR and other things emphasize. It's a real thing. Managing a stable business is. Is a lot easier than managing a declining business. A declining business is very hard for certain reasons. A growing business is very hard for certain reasons too. I mean, it's. It's been so difficult to get people, just to get people on site and, you know, just. It's been. I mean, it's been a good learning experience, but it's been very challenging. And what do you mean?

Interviewer (64:12)

Just the labor constraints. It's still hard to hire people or something else.

Christian Bateson (64:16)

We had to have. We had to have some. There's been a lot of firsts. So we had to basically get a. A high. A high forklift on site. So this forklift has to be able to reach up to the second floor of the data center, take off these trash dumpsters, and then truck them across this construction site. So it has to have big knobby tires and has to be able to reach up high. So it's called a low lift. Right. We've never had manage one of those or operate one of those. We had to get a driver for that as well. So now we finally. We're trying to find a driver. We have cleaners. We don't have forklift drivers. We finally find a guy, and he's not the guy. He's causing all kinds of problems. He's pissing off the ladies by the comments he's making. And, you know, so then we have to find another guy. And I mean, I don't know if you've tried to hire anybody lately, but if you go on, indeed, you'll get a flood of resumes. You might email a hundred people who submitted their resume. You might actually hear back from 10 of them. And then of the 10 that you hear back from, like, one of them might show up for the job interview and that's the person you hire because they actually want a job, Right?

Interviewer (65:16)

Yeah.

Christian Bateson (65:16)

So wild.

Interviewer (65:20)

And. And so just to be clear about this particular. This big contract which is going to be transformative for your business. So generally, construction sites, you come in at the end and clean it up. And for the dur. The prior two years as the building's being constructed, the construction site is a mess with pla. Plastic sheeting and piles of junk and whatever. I mean, it's just. It's a construction site.

Christian Bateson (65:42)

Yeah.

Interviewer (65:43)

Like, it looks bad and they want. What they want is as they're building this data center things to look spic and span mid construction. That's an interesting need.

Christian Bateson (65:52)

Yeah.

Interviewer (65:52)

What's. Just curious, what's the story there?

Christian Bateson (65:54)

I mean, I. I've been told for some that it's by some people that. That that's what these data centers are more like. Although that hasn't been my experience doing other data center jobs. I think it's this particular operator. I mean, they have. So they have all. It's a huge site, first of all. And so at this point. And at that point, you have, like, restroom trailers and you have all these amenities. You have like a big, huge tent with, like, refreshments and stuff. Because it gets hot in Georgia and a lot of it's outdoors. You know, it gets hot in the summer, so, like, people can stay hydrated. Hydration stations and whatever. So you might have five hydration stations and two restroom trailers, and they want to have one person just sit there and keep those clean all day long on a loop. Like, it kind of reminded me almost of like the experiences of my friends traveling in mainland China, where you go into a store and there's like five people behind the counter like, smiling at you. Like. Like this is kind of like the full Employment Act. So I don't know. I mean. And I told the guy from. And I was like, you guys are. You guys are crazy to need this much labor. And they just kept saying that's what they wanted, that's what they needed. So I just kept refining my numbers and. Yeah, so we'll see. It's been great. Like. Like I said, the. The thing that. That I've realized is, like, how many customers we never did business with because of the way that the business was managed previously, which is that the brother who was running it, he. He was like, wanted to be out on the job site in his truck and like, you know, wearing his boots and talking about hunting and fishing and stuff with these superintendents on these job sites. And he wasn't in this. He wasn't at his desk constantly bidding, constantly trying to refill the pipeline. He sort of saw that as like an afterthought. So I've had this amazing partnership with my field manager, Brandon, who, when I bought the business, I said, I don't know shit about cleaning construction, but you do. And I know how to. I know about numbers and I know about selling. I know about, you know, executive stuff, so let's just have a partnership. And I said, I will back you up, I will give you autonomy, but I will have your back all the Time. And he was like, sounds good. Let's grow this thing. He's like, you know, I. I got it. So when we would have an issue, like one of our ladies would be dissatisfied with something or other in the old world, Brandon would tell her, you're behind schedule. We're over budget on this job. It's supposed to be 60 hours per floor. You're doing it in 80. That 20% is our profit margin. Like, you can't do that. And he would be hard on them. And then they would go to Gavin, who was the brother, and Gavin would say, oh, you're doing a great job. Like, it's okay. Right. So he. It was kind of like two people doing the same job that were undermining each other and no one mining the store. So now we just have, like, Brandon's run runs and things in the field, and I just. I have his back, you know.

Interviewer (68:39)

Yeah.

Christian Bateson (68:40)

And I give. Yeah. So. And. And that's kind of the culture that I built is that like. Like one of my very favorite business books is Shoe Dog by Phil Knight, where he talks about building Nike. And he would hire somebody, and he would. He would say, tell them what to do, but don't tell them how to do it. Just, like, make people figure things out, give them autonomy. And then if they mess up, then you figure out what went wrong, and you try to make sure they do better the next time. But Brandon is very good at that, and I'm good at what I do. And so, you know, it's been a good partnership.

Interviewer (69:17)

And, Christian, what about the fact that I. You said a few times as you were taking us through the negotiation and acquisition process, you know, you put yourself in the shoes of everybody else in this transaction, and we're like, seeing Christian Bateson, former Wall street bro. Former Wall street guy. So that probably still is the perception of. Of the employees and of your. Of your. Everybody in this world that you're entering into. Have you had to manage that? That you're this Wall street guy coming into a construction business? How's. How has that disconnect or not been.

Christian Bateson (69:53)

Yeah, I mean, I think the first thing is just to be aware of that. Right. I mean, if you're aware of how other people perceive you, then you're able to say certain things or not say certain things, do certain things, not. Not do certain things. So. And there's always this, like, internal debate I have is like, should I be working on my weaknesses or playing to my strengths? And the answer is, I mostly play to my strengths. So My strengths are in the office. I'm very good at communication. Like, I'm the master of email, right? So if someone emails me, I'll email them back within an hour. I read the email before I send it. Like, I really, really put a lot of time and energy into communication because I think that, So I think a lot of people are not good at communication. And I think, particularly when it comes to small businesses, having master, having real communication skills is like, you know, a key edge to success. But I don't go on the job site much, you know, because when I, when I do, I feel out of place, you know, I mean, you got these grizzled guys wearing boots, and you've got, you know, you don't have a lot of people on there that look like me. And so, you know, that's Brandon's job again, you know, And I do have, I've had, I've had people, like, make comments to me about my, my sort of personal style of, you know, of, like, phone conversation where I can be impatient. And, and so, you know, I work very hard on, like, not responding to, to emails or to, you know, not engaging in situations where that can be, like, a negative or that can be a liability. You know, that perception of me could not be a liability. And, and really what it is is I, I, I feel like I try to be a, a student of human nature and especially of my own nature and to always kind of see, like, what are my own biases and how is this going to negatively impact this outcome and, and just be humble, you know, I mean, and, and, and, and make light of the fact that, you know. Yeah, I'm like the whitest guy out there, you know, and I have a whole, a whole labor force of Hispanics who speak Spanish, you know, so when I meet with them, I think a lot of times they look at me and they're like. And I speak fluent Spanish too, so that makes it even better. Yeah, so that's something.

Interviewer (72:13)

I thought they look at you and just feel completely alienated. But. So wait, so does the Spanish help or not? Must.

Christian Bateson (72:21)

It does help.

Interviewer (72:21)

The part just confuses them further, you're saying?

Christian Bateson (72:23)

Yeah, I think, I think the confusion is when they've talked to me on the phone and they see me in person and they try to match, like, the voice they've heard on the phone with the face they see in front of them. The, the problem with that is that as, as we're growing more and more, I don't really want to have as much like One on one contact with a lot of the, the frontline workers just because what to them is like this huge emergency that they just want to scream and be upset about and quit over to me is like a nothing. So a lot of times I have a hard time just even kind of relating to and, and because of. A lot of them are crazy and they, they do get crazy about nothing things.

Interviewer (72:59)

But give, give me an example what you. I. Yeah, give me.

Christian Bateson (73:03)

Yeah, so, so, you know, I pay them for the previous week and I'll give them, I'll pay them for all their hours and I might give them an allowance for gas and I, I might have put $25 instead of $35 for a day for gas. And that's like a huge thing to them, you know, and again, it's, it's good for me. So in, in managing my business, I've tried to keep a lot of things very manual and not automate them because it forces me to stay more like have my fingers more like on the pulse, so to speak, of the business. And part of that is like, that these are people that are making, you know, that they have a, they have a very different life than I do. Right. They don't make as much money, they struggle to put food on the table or they struggle to support their families, whatever. And so like it's, it's important for me to be reminded of that. And if that means that someone's calling me on Saturday saying I got my PayCheck and it's $10 low and they're like screaming at me, it's like, oh shit, like, okay, yeah, they're a little crazy and they could probably find a better way to convey that. But like, this means so much to them, which, which then just, it just inspires me to like, do a better job to win more jobs to grow the business so I can pay people more and you know, and be like a positive factor in their life, that's great.

Interviewer (74:22)

Christian. And, and, and by the way, this is not something that's come up very often, although it will in a recent interview. It did in a recent interview. Speaking Spanish with a Latin workforce. What, what do you think? So if, if let's say you didn't speak Spanish, I mean, just talk more about, about the fact that you do speak Spanish.

Christian Bateson (74:42)

Yeah, so no, I mentioned my, all my crappy jobs growing up. So I had, I worked with primarily immigrant, like Mexican worker migrant workers when I was in high school. And so not only did I take Spanish and you know, eight years for High school and college. But I would like spend 70, 80 hours a week working on these farm jobs. And so I just got a lot of chance to practice it like, like out there all day. And so I mean I, you know, and then I, my, you know, I, I would encourage anyone to study Spanish as opposed to another language because it's the most useful as an American. Yeah, I mean there's definitely been situations where it made a, you know, it was the difference in, in terms of getting to the right outcome, keeping the customer happy. Because you know, I have, and I have Brandon, my main, my main manager doesn't speak a word of Spanish so he's sort of like will speak English and the person will nod and they don't really know though. They nod and say yes, I understand. Then they'll go do the wrong thing. So I always thought that I would like use my Spanish and go live in Argentina and be like an emerging markets trader or something, not be managing 100 cleaners. But we just hired our first Spanish speaking manager. He's a Mexican, he immigrated to the US when he was 17. So I finally have successfully gotten someone who's a intermediary between me and, and, and my employees who can speak Spanish better than I can.

Interviewer (76:13)

So and, and more on this point about having an intermediary, I'm hearing, I'm hearing both that you want to remain close to the business. I think as you put it, do things manually. So that finger on the pulse, keep a finger on the pulse and the value of that. On the other hand, as you said, you're, you're, you're an executive oriented, you know, person, a business minded person. So you understand the value of working on, not in the business. And you are doing, working on the business type things like hiring this intermediary. So which is it? How are you striking that balance to work on versus in so. Because there's value in both.

Christian Bateson (76:53)

One thing, that one piece of advice that someone gave me at my last job. When you're, when you're involved in a big trade, it's uncomfortable. You wanna, you. So you can tend sometimes to hurry forward to strike a deal and get out of that feeling of discomfort that comes with, with uncertainty. And so they said it's about being comfortable being uncomfortable. And I try to put myself in uncomfortable situations more and more. I'll give you an example. I serve on the board of trustees of my son's school and the whole like it's a school for kids with learning differences and so a lot of the parents and A lot of the staff are just very different people. And it's uncomfortable for me being in this environment. Like, but, and, and so I keep committing myself to like, more and more things and getting deeper and deeper because, and like, this podcast is uncomfortable. Like, you know, I feel nervous and so I like doing things. Oh, thanks. No, but I mean, I feel like I come across as very nervous. I feel nervous. No, no, but like, I, I, I like doing things that make me uncomfortable because that's where personal growth comes from. So. Right. So, so it's both. So at the one hand, I do like to play to my strengths, but, you know, I'll go out to the field and go walk and, and I learn more from, you know, being in that uncomfortable situation than I do being in my comfort zone.

Interviewer (78:18)

You know, I, I'll press you a little bit on this, Christian, because you've, you've talked about yourself as a loner a few times. I have those tendencies as well. Have you ever challenged that about yourself and putting yourself in situations where you can be less of a loner?

Christian Bateson (78:34)

Yeah, I mean, I do. So, like, this is kind of like one thing that I, I alluded to in our email before we spoke, but that I think that a very, very important part of being a successful business owner manager is having some kind of a, like a spiritual, you know, life, whether it's seen a shrink or whatever. It's having that awareness that comes from like, getting out of the day to day bustle and hustle. And so like, my faith practice is like, I meditate. Right. And so meditating is, meditation is the ultimate loner activity. And, and you know, it's, I do it every day. It's phenomenal. It's one of the most important, like productivity and efficiency enhancing things that I do as well as being good for the soul. But like, I also go to church on Sunday with my family, even though I'm not a believer of the religion that my wife takes my kids to. And I sit there and I, and I perceive all these people are here and they're all like singing these songs together and saying these prayers or whatever. And I'm like, it seems weird to me, but I real. But I've had like this sort of epiphany that I think that's a big part of what religion is. It's a social activity. Yeah, it's about God, but it's also about being with other people and, you know, so it's, I certainly don't enjoy going to church. It's uncomfortable for me I kind of view it as, like, I go in every time saying, what am I gonna. How can I get something positive out of this? And then, you know, so, yeah, so the. The philanthropic part, like, being on my. On. On these boards, it's very hard. Like, I love my business because I see something that needs to be done and I do it. And then if you're on a board, you don't get to do that. You might sit at a meeting and, like, have strong thoughts, but you. You struggle for the right way to disagree with others, and you feel like. I feel so much responsibility for the outcome with very little, like, authority to influence the outcome. Right. So that's very uncomfortable. And. And that's kind of like why I'm doing it. I mean, I think I can help and offer perspective that they need, but that's pretty uncomfortable.

Interviewer (80:47)

Well, just to distill this theme, I mean, I love the phrase. In fact, I think I've heard it to. To learn. What was it? Be comfortable and discomfort or learn to be. Learn to find comfort in discomfort. Something. Yeah, yeah, it's. It's such a good one. And I. And I. I'm a believer. I like to think that I've maybe not done that super hardcore, but I. There's. There's an element of that in my personal philosophy as well. This is awesome. Christian. I'm just keeping my eye on the time because I want to hear about your. I want to share with everybody your second acquisition.

Christian Bateson (81:22)

Yes.

Interviewer (81:22)

Which. Which hasn't been quite the. The success story of the first three things. Two of which we've. We've already touched on the value of finance. So you come from this hardcore finance background. You know, I want. I want. I'm very cognizant of having a lot of finance. Former finance people on the podcast, because those who don't have that background become. Are discouraged because. Because you. For the obvious reason that they feel like, oh, if I don't have a finance background, can I buy a business? You know, businesses are fundamentally at the. You know, the internals of a business are really the. The flows of money around, which is finance. So, And. And you have, you know, said very forcefully. I can't remember if you already said it today or you said it to me offline. You know, the value of having a finance background can't be understated. So how. So maybe share your thoughts on it.

Will Smith (82:17)

But what would you tell.

Interviewer (82:18)

Most importantly, what would you tell people who don't have a finance background, should they not do this?

Christian Bateson (82:24)

So I think that first of all, I think that this, this groundswell of ETA is great, but I think that the skills that it takes to successfully run a small business as much as anything like you, you're well, well served. Having some gray hair. And like I posted this on a Search Funder chat and this is not the finance thing, but this is, you know, someone was talking about how hard it was and you know, whatever, and I had a guy tell me that they spoke to a Navy SEAL, a guy who was a former U.S. army Ranger that said running a small business was the hardest thing he's ever done. Harder than being in combat in Iraq.

Interviewer (82:58)

Yeah, yeah. And guests say exactly that.

Christian Bateson (83:01)

Yeah. And, and you know, I think the more life experience you have and the more you like get beaten down, like my thing on this I post on Search Funder was like, get married and have some kids, like raise a few kids that will humble you, that will give you gray hair and beat you down. And like it's having that humility and patience that life teaches you that is so like, important in terms of, for, at least for me. At least for me. And I am always trying to like, be aware of me and how I'm different than other people because you look at, you know, all these young hotshot, you know, tech guys that build enormous businesses in their, in their twenties. So maybe, maybe I just needed life to smack me around enough to be, you know, to be a better business owner. But yeah, I mean, I think, look, it comes back to you can strengthen yourself where you're weak. I think if you can, there's probably a lot of good online courses, but to the extent that ultimately businesses are about money, right? It's like revenue costs, profit and if you, if you, if the numbers don't work, then you don't have a business. And I think that's probably why most of them go bankrupt, is that, you know, mo most business startups fail is because the numbers just don't work. And so the faster you can identify the like, like I would, I would sign an NDA, get a write up from a guy on biz by sell. I could look through the, the P and L statement and I know instantly if it's a good business or not just because like I speak that language. So. But on the other hand, you know, I'm not great at managing people. I'm great at managing my managers, but I'm not great at like, you know, dealing with these uncomfortable emotional situations. And so, you know, I have managers that are good at that and I have good relations with them. And I say I'm going to delegate that to you because that makes me uncomfortable and I'm not good at it and that's not the highest and best use of my time. So I think you can do the same thing with finance. You just, you know, you have to have someone who you, you know, who you really trust.

Interviewer (84:57)

Yeah. Well, and just to weigh in here, I would feel that you have to have some comfort with certainly a little bit of math. I mean, you can't run screaming from arithmetic.

Christian Bateson (85:12)

Yeah.

Interviewer (85:13)

Because, because fundamentally there is math at work here. However, like, you know, seventh or eight, seventh grade math is probably, sixth grade math is probably, probably enough because it's mostly adding and subtracting. There are instances where there are, you know, the effects of compounding and some exponential stuff and some fractions. And that's going to come much more naturally to a finance person who has been swimming in that for years. And there can be a little of that. And you should. Audience member. Educate yourself on that stuff. There are plenty of finance courses that you can take. You don't need to take a 25 hour finance course, though. You can probably take a two or three hour one. And just like Christian said, get comfortable being uncomfortable. So this isn't, first of all, if you're somebody who just runs from discomfort, you probably shouldn't be on this path anyway. Period.

Christian Bateson (86:04)

Exactly.

Interviewer (86:04)

So whatever, wherever you're on, uncomfortable, if that's enough of a. Something that you just can't handle, then you probably shouldn't just be on, be on this path. But so lean into it somewhat. But you don't need, I feel that you don't need to be a finance jockey to do this. And like Christian, you just said there's outsourceable help. Fractional CFOs are now a thing, for example. So that's kind of where I land.

Christian Bateson (86:31)

Yeah, No, I think that's right. I think that's okay.

Interviewer (86:34)

Okay. Okay. And then just more about compounding. I said we'd, we'd, we'd return to this. You're happy with, you're frustrated with. Because the little changes you make. It feels like you don't get anywhere. You're treading water and then you look up five years later and holy crap, look at all this change I've made.

Christian Bateson (86:53)

Yeah.

Interviewer (86:54)

I basically just take the words out of your mouth. Or is there more to say?

Christian Bateson (86:57)

No, I think, I think that's exactly right. But I don't think it's, oh, crap. I think it's like I have I had think I've been very good to my managers. I've made an effort to always do the right thing and pay them more than they could earn at another job, but also give them more responsibility. So like Brandon, I mean, he basically runs things. Sure, there's customers out there that thinks that, that Brandon is the owner of Resolute. But like, when I have anything that needs to be done, I don't say, and this is really hard. There's a tendency for a lot of business owners, I think, and managers in general to feel like they need to be involved in every decision. Partly it's maybe just feeling responsible. Maybe it's ego. It's, you know, this thing's going to happen and I need to be part of it or I need to have my stamp on it. I need to have credit for it. I need to somehow, you know, and I just do the opposite. Like I, I read a lot about the history of World War II. Okay. The reason that the world US won World War II as much as anything else against the extremely well trained Nazis and Japanese troops is that our military is like a, kind of like a metaphor for our society, which is that responsibility is pushed down to the lowest chain. So you have a field team, a leader of a, you know, machine gun team, and if he sees the opportunity to take the initiative, he would take it. That's how you win battles, right? You don't. Whereas the Germans would be more likely to go back up the chain of command and ask for approval from, you know, the general to do this thing. Right. And so having that flexibility in the field, in the moment of fire is, is, was like maybe the key thing that won the war for, for us in World War II. So that's how I try to run my business. So I say I'm going to hire you, I'm going to put you down at the ground level and just make decisions. And if you, if you really have a question, then call me and ask me whatever. But like, don't call and say, I could rent this scrubber for 100 bucks or this scrubber for $110. Just make a decision. Like I'm focusing on other things and then that. So then you're a manager for working for Christian Bates. And then every job you've ever been at before, your managers told you what to do and told you you were doing it wrong. And they've never had faith in you and given you like, autonomy and paid you for the, for making good decisions in a situation of autonomy. And that's what I do, I say, look, don't, like, just figure it out. You know, if you really have a question, call me. And then again, people make mistakes. So I have one of my managers, so he's taking it too far. So when there's a problem, he doesn't tell me. He just tries to solve it. So I had to be like, no, no, no. This approach works like in normal situations, but when there's a customer problem, someone's upset, something went wrong, then you have to involve me, because not that I don't trust your judgment, but I just want to make sure that I agree with you. And so then, like, you know, so now he's learned that he can manage 98% of stuff, but in the 2% of times when there's a problem. So that's like one example. And that. So you give people more and more, and you can see as that they can. As you see that they're capable of managing, you give them more responsibility and more responsibility, and then you pay them. And so that's why I have, you know, I have now four managers who basically run my business for me, and I can devote all my energy to my customers. Right? To. To. And when I say my customers, I don't mean like the. The guys on the ground, on the job site. I mean, you know, the guys in the office, the guys that are making decisions about whether to hire Resolute or another cleaning business. I can give a plus effort on every single bid for every single customer. And that's how we're. We're growing our market share with existing customers, and we're adding new customers who, like, hey, I hear Resolute's doing a great job. You should get a number from them, you know, for this thing.

Interviewer (90:32)

Awesome. You know what you said about the US Military, it's so funny. I just myself learned this, and the explanation was so close to what you just characterized from World War II, you know, because I. It was somebody in the search community, and I said, you know, the. The civilian. My naive civilian view of the military is that it's all taking orders, taking orders, taking orders. And yet so many. So there's such an overrepresentation of vets, veterans in the ETA world, you know, because they get, you know, the. The phrases, you know, all this leadership training, leadership experience in the military. But I finally said, you know, but.

Will Smith (91:13)

My sense is that the style of.

Interviewer (91:15)

Leadership there, or, you know, your experience there would have been just following orders. And obviously that's not. When you're the owner of A business. What it is. And they explain. No, the culture of the US Military is different and. And unique in this way. That there's this extreme autonomy. Yeah. Of course you have, you know, a chain of command. Yeah. But at your. You know, your. You have a mission, and within the parameters of that mission.

Christian Bateson (91:43)

Yes.

Interviewer (91:43)

You, as leader, have a ton of autonomy.

Christian Bateson (91:46)

Yeah.

Interviewer (91:47)

And I. And it was. It's just such a crystallization for me. And I didn't know, as an American that our, you know, that. That our military has this. This feature is really cool. It's a really cool insight.

Christian Bateson (91:58)

Yeah. And I was going to mention earlier. And now we're running short on time. I was going to mention earlier Jocko Willink's book Extreme Ownership. And, like, if I could tell anyone, three books to read as a small business owner, one is Shoe Dog, one is Extreme Ownership, and then, you know, Meditations of Marcus Aurelius. But, like, Extreme Ownership talks about the mission. And I have to tell myself all the time, I'm like, I'll be struggling with something, and I'm like, no, this is. You're making it about you. It's not about you. It's about the mission. You know, and I'll tell that to my employees, too. It's. It's. It's about the mission.

Interviewer (92:27)

So, yeah, you made a second acquisition. We're just about to hear a very abbreviated version of that story. But. But before we do, give us the context of what your bigger vision is for the rest of your career, now that you've bought one business and clearly have aspirations to buy more.

Christian Bateson (92:41)

Yeah, no, I mean, I want to. I want to have a business that generates $100 million in revenue and, you know, generates $10 million in cash flow. And, you know, when I'm 70, I can decide to sell it for a hundred million dollars or I can, you know, keep it, have my kids run it. You know, I mean, I just want to keep. Because I keep learning different things as I progress that. Like. Like when you get to the false summit of a mountain, then you can see where the next summit is and the next summit. So you have to keep climbing for these vistas to open up. And that's kind of like what continually happened for me. And that's. That's kind of a good tie into your. Your. To the second acquisition, which is, you know, during COVID I'm sitting home, my kids are home doing online learning, and the business was slow, but it was basically running itself. And I was, like, just bored. And I decided I was going to buy another business and replicate the success of my first business. And so I found it. It was a. My experience with the maintenance, cleaning business, the sort of janitorial business, but it was a tougher nut to crack, Much more competitive, lower margins. But I found this business on biz by Sell. The founder was French, West African. She grew up in Paris, but she was moving to Senegal so her kids could experience, you know, kind of more of the culture that she grew up with. She had grown this business very rapidly during COVID which I should have realized that Covid was a big driver of the growth. But, you know, she was. She was offering it for $650,000. That was advertised at $185,000 of SDE. But when I ran the numbers through this earnings model and I figured out all the things that I could take out, the costs I could take out, I figured it was more like $250,000 of SDE. And so at $625,000, that would be, you know, two and a half times. Wrote an offer letter. We negotiated. She was at 650. I was started at 600. We had a deal at 625. So. So there were a lot of red flags, which I. Which I ignored because I wanted to buy this business. One was I sent Brandon down, my field manager. I said, go spend some time with Jamila and tell me what you think of this thing. And he. And he called me after. He said, look, she's very involved in this business. She's out there. She's. She's out at all the jobs. She knows the customers. She knows the ladies that are doing the cleaning. She's the key driver of this business. And this business is located an hour and a half away on the south side of Atlanta. I live on the north side of Atlanta. So he was like, you know, we have all these big contracts. We're winning with Resolute. Like, I'm just. You know, it could be a bit of a distraction. And so, of course, I just disregarded what he said. And. And then. Then my SBA lender took a look at the numbers, and they. Because they have to give a business valuation, they said, this business is worth 550,000, not 625,000. So rather than saying, oh, here's another reason for me to pump the brakes, I just did a side letter with her and said, you know, I'll pay you this additional amount after xyz, which I'm paying now, and trust me, every month that I have to send her that money, it Just makes me feel sick to my stomach.

Interviewer (95:52)

And then, Christian, why were you so hot and bothered about this business?

Christian Bateson (95:56)

Because it was growing. I thought this business could go from. So when I bought it, it was 800,000 of revenue and call it, you know, 200,000, 250,000 of cash flow. I thought within five years it could be a $5 million revenue business. I just basically took the last three years of growth and extrapolated forward without thinking about what was involved in driving that growth. One, Covid and everybody who owned a business just was willing to pay anything to have it perceived as being cleaned by their customers. And two, that you had this high energy, really friendly, outgoing, charismatic person that was building it from the ground up. And, you know, she would tell me, oh, Christian, I went to Africa for a month for vacation and the business ran itself. And I was like, oh, okay, well, this sounds great, right? So she caught me leaning and, you know, it's just, I think. I think this is one of these lessons that have to be learned over and over. And I mentioned earlier my friend Tim Clark, who has 20 years experience doing this now, and we have these conversations and he's like, yeah, he's like, I have all these rules for myself, but I break them all the time because I just decide that I have to have the business, you know, and that stuff washes out. I mean, he. He's gotten himself into bad deals or what he thought were bad deals that turned out to be amazing deals because it just worked out. So anyway, I closed on the business. Oh, here's another thing. Don't ever buy a service business unless it has a manager. So this business did not have a manager. And I said, well, I can take one of these, like, top notch cleaners and coach them up and turn them into a manager. So candidate number one comes in and I said, hey, you know, you're doing a great job cleaning. I want to promote you to manager. I'm going to pay you $50,000 a year. You're not going to have to clean anymore. You're going to be able to go around and make sure that all the work's getting done well at all of our customer sites and, you know, restock supplies and stuff. So she says, well, I always wanted to make $3,000 per pay period, which is every two weeks. So that'd be 78,000. And, you know, but it sounds like a lot of work, so I'll probably need to have like an assistant to drive me around. So I was just like, oh, okay, well, you don't understand at all, like, what just happened, but I do. And I was like, okay, next. Then I had another one of the ladies and she would call me and email me and text me all the time. She didn't know how to manage people. Right. I just figured that managing people was just like cleaning and it was just completely wrong. She made herself miserable. She made me miserable by just generally like lording it over the other ladies. Like, she'd been elevated and now she, she was just mean to them and she didn't know how to, how to manage it. So anyway, finally Jennifer. So one of my managers, Jennifer, who, you know, I had hired and she was Resolute at Resolute. Yeah, she was, she was an army vet. Jennifer, like served in the army. She, she drove heavy earth moving equipment at a waste management like.

Interviewer (98:55)

Site.

Christian Bateson (98:55)

And I mean, she's a little rough, right? But, but hard working and very loyal and. And she's like, I'll step in and be the manager of this business. So now she's working, running Resolute, running all the office stuff, and she's the manager for snr. So I was like, all right, so now, so now she went from making 60 grand a year to making, you know, like 100 grand a year. And so that's kind of back to the same thing. And I didn't tell her how to do it. She just kind of figured it out. We had conversations when there were issues, but, you know, we've lost a lot of customers. We lost probably like 30% of our revenue in the fourth quarter of 2022, once Covid was officially over. And, you know, we're working on adding those customers back, but it's not, you know, I mean, the nice thing about it is I don't pay myself anything, you know, have a full time manager and we're covering our debt and we're generating cash. And, you know, I'm kind of, I'm kind of like just keeping it on the back burner, you know, it's. It's steady and to really get it to grow, I haven't cracked the code yet. Right. So here we are, we're a year and almost two years in. I haven't cracked the code on how to really drive growth in that business like I have with Resolute.

Interviewer (100:05)

And why is the answer not what you. Where you spend a lot of time at Resolute, namely kicking ass in sales.

Christian Bateson (100:11)

Because kicking ass in sales in that business means going into people's offices, going into the doctor office and handing out cards, which Means not being in my desk, but being in my car driving an hour and a half through soul crushing traffic of Atlanta down to where all these customers and all the employees are and actually doing it in person. Whereas Resolute, again, it plays to my strengths. It's all, it's all online. Like, I get an email from a software platform that manages the bid process for all these different customers and I can go in and do it all at my desk and look through the plans, put together the bid, you know, send all the bids out on time if there's an issue. It's all email communication or cell phone communication. I don't have to be there in physically be there.

Interviewer (100:54)

What do you think the learning is on the business? Other than the obvious that you were kind of. There were, there were red flags and you just plowed through them because you somehow got emotionally invested in. Just in, in owning this thing.

Christian Bateson (101:07)

Yeah.

Interviewer (101:08)

Is. Is there another learning or maybe that's the learning.

Christian Bateson (101:10)

I think. No, I think the main learning is that in, in buying a business, you're going to, you never can tell how good it or bad it is until you buy it. I mean, you. Not, not really. You can, you can do your due diligence. When you buy a good one, a really good one, you can still screw it up and when you buy a bad one, you can still fix it. You just, you know, you just have to kind of keep on grinding and, you know, just never give up. Right. I mean, I think I have, I have. Now that I'm in this community, I've talked to a lot of people that have bought businesses and some have better experiences than others. Right?

Interviewer (101:48)

Yeah.

Christian Bateson (101:48)

And, and I have a buddy who bought a moving business and he, he was like, people would know show and he would be out there driving the trucks himself. And it was really hard. It was so uncomfortable for him. And I'm like, yeah, I know, it sucks. Right? And now he used that as fuel to like grow it and to get it to this point where you could hire someone. And now from a 500, 000 revenue business, it's like a $2 million business two, two years later, you know, and so like your, your, your fate is never written, right? We always have the chance. And like, if I decided that I was going to take my new business and really make it a plus, that I wasn't going to play golf and I wasn't going to like do all the other things I do with my free time, I was going to be down there every day. I could drive that Business, I'm making a choice, but I'm like, you know, my life, my lifestyle, balance and, you know, other things I choose to do with my time are more important to me than, you know, than that business. And, and plus my other business has grown so much so it kind of like took the emphasis off of it.

Interviewer (102:46)

Thank you for the, for the story on business Number two, I want to close with a couple of questions that are kind of personal, but tie it all together. One is what, just on the heels of what you just said about, you know, having balance in your life, you also said you want to get to $100 million. You're giving yourself whatever, 20, 30 years to do that. But do you think that you can realistically get to $100 million in revenue, $10 million in EBITDA, having a basically balanced life?

Christian Bateson (103:17)

Well, the jury's out. I mean, I think, I think that let's say if I went from, you know, one business that did 2 million of revenue to now having two businesses that'll do, you know, 8 to 10 million of revenue this year, in five years, you know, the CAGR is definitely there. I think a lot of it is just I'm not out actively pursuing business opportunities. I think there's probably a good chance that to get to that number, I'm going to have to be more active. I think as my kids get older and they're out of the house, that will free up, you know, some time and energy. But I also just think that I'm sort of waiting for opportunities to knock in terms of getting a call because I hear these stories so and so called, and they wanted to sell their business. That hasn't happened to me at all. Yeah, but, you know, look, there are, there are, there's a huge pie of, of residential cleaning, right. Everybody's looking for a good cleaner for their house and, and like that. That's a business that I think I could scale up very quickly if I found the right one of those. But no, I mean, and this is a debate I'm having with myself all the time, right? This is the debate I had after Resolute worked out well is like, oh, I want to buy another one. But I'm like, but then do I want to, you know, to do. I. I guess it's hard for me to handicap the likelihood that I can grow to that level and maintain my life balance. But so far it's been working.

Interviewer (104:46)

Well, the other thing is for, to put it back on you philosophical guy that you are, you know, this hundred, $100 million, $10 million EBITDA. Nice juicy round numbers. Completely meaningless. Why not 8 million? Why not 5 million? Why not 4 million? I mean. Yeah, I get it. I mean, obviously, like there's, there's something very. What's the word? Magnetic, I guess, about nice round numbers. So we all. Yeah. If you ask anybody what their number is, it's probably going to be something round, but it doesn't need to be. And why does it need to be so big? You yourself said Atlanta is not a very high cost of living area. You don't, you no longer have to compete with, you know, the finance CEOs and on Wall street for net worth.

Christian Bateson (105:32)

I don't know. I mean, you're taught you're asking like a fundamental question about human nature. I mean, why do people, you know, why does, why does the, you know, why do people make so much money so they can like go down and sit on a fishing boat when they could just move down and you know, be a fisherman. Be a, you know, a fishing boat charter guide.

Interviewer (105:50)

Sure. The old fisherman. Right. Go ahead. Yeah.

Christian Bateson (105:52)

No, no, but I mean, I think for me, like, look, I took me 20 years of my career to figure out something that I'm really good at. I'm really good at running these, running these, these cleaning businesses. Right. So now, because I'm really good at it, I enjoy it a lot. And so because I have fun doing it, I want to keep doing it. But it's like the money isn't really, you know, and this will be hear people say the money is just like a way to keep score. Right. I mean, I don't need, I, I could, I could retire now and be very happy. But like, I love what I do. And people say, you know, oh yeah, you should, you know, you should sell it and you should buy this other thing. And I'm like, I don't want to sell it. Like, I like running it. Yeah, I like, like I have these phenomenal managers who I'm able to, you know, make they enjoy their jobs more. They're making a lot more money, they're happier. It's possibly life changing for them. I would, couldn't do that if I sold the business to somebody else. Because the first thing that business, new business owner is going to say, wow, XYZ is making $150,000. Well, the market value of that job is 80,000. So there's, there's some synergy, right?

Interviewer (106:51)

Yep.

Christian Bateson (106:51)

And what they don't realize is that this person is capable of doing more than that standard job. Description, which they do for me, which is why I pay them more and that's why I have all this free time. So, you know, you know, look, I, I, I remember when I first started on Wall street in 1999, and everyone had a number, right? My number was like 10 million. You know, I was like, if I can get to 10 million, I'll be, I'll retire and be out. And then it's like the mountain thing, as you get closer to that number, the number just, just changes to a bigger number. But I think, you know, I just want to keep building this thing because it's fun, you know, and the money is nice and it's, it's after 10 years of grinding to like, support my family, it's nice not to have to worry about what things cost anymore. It's nice to get a new car. It's nice to fly first class when you go on, you know, family vacations and stuff. But yeah, maybe, maybe it's, maybe it's 8 million. Maybe it's 20 million. Maybe, you know, who knows, Right?

Interviewer (107:51)

Yeah, exactly. I mean, I, I, I, I, when I said the number was arbitrary, I immediately started notching down. But, you know, maybe Your number is 20 million. Why, why are you aiming so low, Christian?

Christian Bateson (108:00)

No, I mean, I, I just finished reading this book, David Goggins book, Can't Hurt Me. And, and he's, there's this moment, or he's like, what else am I capable of, right? I mean, his own, his own, like, limitation was, I think I can only do this. But then he starts thinking, they start doing all these incredible things. And that's kind of been the story of the last five years for me is like, you know, there's really nothing I can't do. It's just a question of trade offs, you know, how much financial risk, how much time, how much energy, whatever.

Interviewer (108:27)

Well, thank you. That was one of the other personal questions I wanted to ask. What does wife feel now about this path, given that she was resistant?

Christian Bateson (108:36)

She, she doesn't talk about it so much anymore. That's kind of like her, her acknowledgment that it's been a success. No, I mean, she, look, she's happy. I mean, I think I'm happy. People always ask that question and, you know, how, how are you guys doing? And I'm just like, we're, we're great, you know, but I, I feel like I have to tone it down because I feel like everyone asked that question. And then there were times in my life when I was not doing great. Right. When I was, like, pretty unhappy. And I'd be like, oh, we're great. You know, so you just kind of say that as response. But I mean, my wife is. You know, she's happy, I'm happy. And she. This is actually great. I talked to a buddy, one of her former colleagues, who she saw in New York last. Last month, and we. And he was thinking about buying a business. He's a consultant, and he wants to buy business. And so he. So we did a call, and I do a lot of these calls, and. And he was like, yeah, I talked to Connie, and she was like, christian's doing so great. His business is doing so great. He's so happy. So to hear it. She would never say that to me. Right. She would never be like, you're doing so great. You're so happy. I'm happy for you. She's just like, more of like a dream crusher. She's a hole poker. That's what she says. So it's good we balance each other. My enthusiasm and her. Whatever. Balance out. But it was great to hear from him that that was her story at this cocktail party that I was doing great. So.

Interviewer (109:55)

Yeah. Yeah. Although I got to say, Connie, you know, these. These are the things that people should be sharing with each other directly rather than through the grapevine. But what do I know? Where do you slot in, Christian, going all the way back to the top in your family? I'm just curious from a couple of. Coming from a couple of Catholic hippies, as you put it, which, by the way, seems like a contradiction in terms. And one of the seventies, man. Okay. And one of eight. I'm just curious where you fit. Where, you know, capitalist. Although maybe a more wholesome capitalist today than you were when you were on. On Wall Street.

Christian Bateson (110:34)

Yeah.

Interviewer (110:35)

Where do you slot in with the overall picture of the Basin. The Basin clan?

Christian Bateson (110:42)

I mean, I've got a number of siblings who are. Who are teachers. My dad was a teacher before he became a principal, so I have a number of siblings who are. Who are educators. I'm the only person in business. I had a brother who dropped out of college and worked for the forest service for 15 years. Now he's doing construction. I have. I did have one brother who sort of followed my path and did the finance track. But, yeah, I mean, it's been interesting to see the different outcomes of all my siblings from, you know, basically the same genetic stock and same upbringing. You know, I'm the only one who kind of really went the hardcore, you know finance and business track. And as a result, I think I've always kind of been the black sheep in some respect. Like my, my parents growing up, they would never say, we're really so proud of you for making straight A's. It was more like we're disappointed in you that you don't want to come to church. Like, they were very religious almost in like an over the top kind of way. And I just was like, I'm getting out of here, you know, like it wasn't for me. And then I just never really came back. And I think that's it was that taking that, being willing to take a series of leaps like that in life, you know, that and it's hard. I mean, I don't know, it's like one of those, like the who knows what makes you who you are and leads you to do the things you do.

Interviewer (112:07)

I sure wish we knew that. Last question for you, Christian. It's been the underpinning of this entire episode, but I just want to ask you for a direct answer because in our emails you've expressed how enthusiastic you are about this path.

Christian Bateson (112:21)

Yeah.

Interviewer (112:21)

It's something that you enjoy talking about. So take us home.

Christian Bateson (112:26)

Yeah, I mean, I think if some, if you're willing to, to take a risk on the most positively life changing career thing you can do, then, you know, small business ownership is, is for you. And it's just a question of, you know, are you at that point in your life where, you know, you're not worried about the downside of, of business ownership? It's, it's more about on your deathbed, are you going to look back and say, I wish I'd done that thing right, as opposed to, gee, I wish I had, like, not taken chances. And I mentioned this too when we spoke. My brother Jordan passed away at 40 years old of ALS and like, you know, he. So whenever I get nervous, like even, you know, like doing this podcast or going to speak to groups, I'm very uncomfortable in group speaking. I think about him and he's like, he would have spent, like, what are you afraid of? You know, like what, like what's the worst that's going to happen in a thousand years? No one's going to know we were ever here, so you might as well live life to the fullest and grab onto it while you're here.

Interviewer (113:30)

Amen. Thank you, Jordan. Beautiful words to end on.

Christian Bateson (113:34)

Yeah.

Interviewer (113:35)

Christian, you've said you take calls. You like talking to people offline one on one about the path. How do you prefer they reach out.

Christian Bateson (113:45)

I'm on LinkedIn and then so they can, they can certainly get me at, send me an email on LinkedIn. I'm on search funder.

Interviewer (113:51)

Well, this has been excellent, Christian. I really appreciated not only your story, but your kind of philosophical angle on things, your, your self examination. It's a great attribute. Thank you very much for your time and congratulations on, on, you know, clawing your way back out of the misery black hole and into a life now that clearly fulfills you.

Christian Bateson (114:13)

Thank you very much. And it's, you know, very nice speaking to you and seeing you.