Podcast Summary: Acquiring Minds - Episode "How to Survive Buying into a Terrible Industry"
Introduction and Overview
In the January 23, 2025 release of Acquiring Minds, host Will Smith delves into the tumultuous journey of acquisition entrepreneurship with guest James David Williams, also known as IO Phillips. The episode, titled "How to Survive Buying into a Terrible Industry," offers a candid exploration of the challenges and triumphs involved in purchasing and turning around a struggling business. Throughout the nearly two-hour conversation, Williams shares invaluable insights, strategic lessons, and personal reflections, culminating in his distillation of 16 commandments for acquisition entrepreneurs.
Background of James David Williams
James David Williams begins by recounting his early life, emigrating from Nigeria to the United States as a teenager—a move fueled by entrepreneurial aspirations instilled by his father. Despite earning a degree in chemical engineering from Northwestern's Kellogg School of Business and achieving significant corporate milestones, Williams felt an unrelenting desire to pursue entrepreneurship. This drive led him to explore search funds, a path that would ultimately shape his professional and personal life.
"If you ever got the opportunity to start, operate, own a business, you should." [05:11]
The Acquisition: Buying the Resurfacing and Refinishing Business
In 2017, Williams and his wife made the significant decision to acquire a resurfacing and refinishing business based in Houston, Texas. This venture was chosen not only for its alignment with Williams's background but also due to the support of a family office investor that offered a simplified investment process.
Initial Challenges: Hurricane Harvey and Team Turnover
Shortly after acquisition, Williams faced a series of unforeseen challenges. His wife endured a traumatic delivery, necessitating his presence in Chicago while the business operated in Houston. Compounding these personal trials, Hurricane Harvey struck Houston, leading to immediate operational disruptions.
"Hurricane Harvey slams Houston sales slide fast." [00:31]
The aftermath saw Williams grappling with payroll issues as employees faced difficulties cashing their checks—a critical first impression with the team.
"The first payroll checks don't clear." [00:31]
Additionally, the business experienced high turnover, with former employees leaving to start competing services in an already competitive market.
Discovering Industry Corruption
As Williams settled into his role, he unearthed widespread corruption within the industry. This revelation was exemplified when a key supervisor suggested unethical practices to secure contracts, such as hiring women to manipulate gatekeepers in apartment complexes.
"We need to hire women to go f the guys." [35:53]
This corruption not only tarnished the business's reputation but also significantly impacted sales and profitability.
Financial Struggles and Sales Decline
Within the first 18 months, Williams witnessed a dramatic decline in sales—over 50%—and profits plummeted by more than half. The competitive landscape, saturated with low-barrier entrants engaging in dubious practices, made it nearly impossible to sustain growth.
"Sales dropped more than 50%. Profit dropped way more than 50%." [54:10]
Emotional and Personal Impact
The relentless challenges took a heavy toll on Williams personally. He openly discussed the emotional strain, admitting to failing as a husband and father during this period. The stress manifested in strained relationships, weight gain, and a pervasive sense of inadequacy.
"I was the worst husband, the worst dad that you could ever think about." [56:33]
Williams emphasized the blurred boundaries between his personal life and business, highlighting the all-consuming nature of ownership.
Pivoting and Turning the Business Around
Facing insurmountable obstacles, Williams recognized the need to pivot strategically. Treating the struggling business like a startup, he explored adjacent markets, ultimately finding success in servicing single-family rental owners—a burgeoning asset class in Houston.
"We start scaling that. And it's growing like crazy." [67:41]
This pivot not only stabilized the business but also led to record revenues pre-COVID-19. However, the subsequent pandemic introduced new challenges, leading Williams to make hard decisions about restructuring and eventually exiting the business.
Exit Strategy and Outcome
After overcoming the initial turmoil and achieving significant growth, Williams decided to exit the business. Despite not achieving a monumental financial return, the exit provided a sense of accomplishment and validation for the arduous journey.
"It was a great outcome considering the fact that we could not have been in existence a few years before." [96:53]
The 16 Commandments of Acquisition Entrepreneurship
Throughout the episode, Williams referenced his "16 Commandments of Acquisition Entrepreneurship," a set of guiding principles distilled from his experiences. Some of the key commandments discussed include:
-
Accountability Beyond the Boss: "Making it to the top job isn't a ticket to avoiding accountability. Your market, customers, and employees will hold you accountable." [97:37]
-
Industry Selection is Crucial: "The industry you choose can break you much faster than your skill as a leader will make you choose wisely." [100:25]
-
Decision-Making Focus: "Focus on making decisions good, not just making good decisions. Don’t obsess over too similar options." [101:00]
-
Operational Excellence: "Be great in the ways your business needs you to be great in the future. Your business will reward you by being great so that you can be whatever you want to be." [103:52]
-
Eloquent Quitting: "Winners are eloquent quitters. They use fancy words like pivot when something is not working." [106:33]
Personal Reflections and Lessons
Williams shared profound personal insights, emphasizing the importance of mindset, emotional resilience, and the pursuit of fulfillment beyond financial success. He candidly discussed the pitfalls of tying one's identity to business achievements and the necessity of finding deeper purpose.
"Everything seems existential to you initially... Manage your emotions accordingly." [72:04]
He highlighted the essential balance between professional ambitions and personal well-being, advocating for spiritual fulfillment as a cornerstone of lasting success.
Current Endeavors: LP First Capital and Operators Coach
Post-exit, Williams co-founded LP First Capital, an independent sponsor group focused on acquiring low-middle market businesses in service-based industries. With over 61 acquisitions in five years, the firm excels in navigating "dirty" industries by leveraging operational expertise and strategic partnerships.
Additionally, Williams launched Operators Coach, a platform dedicated to mentoring CEOs of acquired businesses. Through personalized coaching sessions, he assists business owners in overcoming operational challenges, enhancing leadership skills, and steering their ventures toward sustainable growth.
"Operators Coach is a platform where I get the opportunity to coach CEOs who are acquisition entrepreneurs going through this journey." [119:57]
Conclusion
This episode of Acquiring Minds offers a raw and enlightening narrative of acquisition entrepreneurship's highs and lows. James David Williams's journey underscores the critical importance of strategic industry selection, emotional fortitude, and the relentless pursuit of purpose over mere profit. His 16 commandments serve as a valuable roadmap for aspiring business owners navigating the precarious waters of acquiring and managing existing enterprises.
Notable Quotes
- "If you ever got the opportunity to start, operate, own a business, you should." — James David Williams [05:11]
- "Hurricane Harvey slams Houston sales slide fast." — James David Williams [00:31]
- "Winners are eloquent quitters. They use fancy words like pivot when something is not working." — James David Williams [106:33]
- "Everything seems existential to you initially... Manage your emotions accordingly." — James David Williams [72:04]
Further Resources
For more insights and resources related to acquisition entrepreneurship, listeners are encouraged to visit Acquiring Minds' YouTube Channel and sign up for episode summaries at Acquiring Minds.