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- [00:00]
Will Smith
Today's guest may be someone you've heard of. Nick Huber, the sweaty startup guy. One of the early voices in the boring businesses trend. Nick exhorted his followers to stop equating entrepreneurship to tech and Mark Zuckerberg and instead recognize all the opportunities available in any town to anyone willing to work. Now that's old news to you, listener, but Nick was early with that message and it was influential to me personally. Well, last year news broke that Nick had acquired Support Shepherd, a recruiting agency for Filipino talent that was well known across Twitter and in small business and entrepreneurial circles. It was a high profile $52 million deal and Nick, in this interview, unpacks exactly how he structured it, how he pulled it off. So today you will learn how a first time sponsor puts together an acquisition like that. Nick doesn't come from a finance background. He'd never bought a business before. Yes, he'd acquired a portfolio of self storage real estate assets, so he had some deal making experience. But this was at a different level, in a different space, with different investors. And he figured it out as he went. He got help from his smarter, more experienced friends. He had calls with over 100 investors, some of which lasted all of five minutes as they quickly dismissed him. But he got it done. And my takeaway from his story is his ability to learn in real time as he charged after an ambitious target to not be cowed by inexperience or not using the right vocabulary. And there's a lot more in this wide ranging conversation. We talk about building a media platform and being an influencer. I really enjoyed it and think you will too. And as you'll hear, my partner in Mind's Capital, Nicholas James, co hosted the interview since we're also publishing it as an episode of the Mind's Capital podcast. Nick's acquisition of Support shepherd was after all, an independent sponsored deal, the very type that we cover every week over on the Mind's Capital podcast. Okay, here is buyer and co owner of Support shepherd, now rebranded Somewhere.com Mr. Sweaty Startup himself, Nick Huber. One thing that you may have heard said on Acquiring Minds is that it's surprising how little offshore talent is used by entrepreneurs in their new acquisitions. Offshoring would seem to be a key lever, an obvious way to generate value in a small business. But we don't hear about it very much. My guess is that's due to an assumption that offshoring works in white collar office work, but not in the blue collar businesses so commonly favored by searchers. Well, in an upcoming Webinar Nick Huber yes, the same Nick Huber, Today's guest will correct this idea and show you how offshoring can indeed be a tremendous tool that you bring to your blue collar acquisition. Nick has built an empire in self storage and offshoring roles to the Philippines, to South Africa, to Latin America has been key to his success in that industry. The webinar with Nick is How to Offshore in a Blue Collar Business. It is Tuesday July 1, 2:30 Eastern. Register at the link in today's show notes or on the Acquiring Minds homepage. Acquiringminds co welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. The team at Aspen HR recently published a short white paper targeted at searchers Entitled A New CEO's Guide to Human Resources. It lays out the key items you should be thinking about as you transition into CEO and owner of the business you bought. The link to download it is in the show notes. Aspen is a professional employer organization or peo run by a searcher for searchers. Search fund veteran Mark Sinatra runs the company which provides HR compliance, flawless payroll, Fortune 500 caliber benefits and HR due diligence support for your acquisition, all for a fraction of the cost. Go to aspenhr.com or contact Mark directly at mark aspenhr.com.
- [05:05]
Nick Huber
Nick Huber welcome to.
- [05:08]
Will Smith
Acquiring Minds and the Minds Capital Podcast.
- [05:11]
Nick Huber
We're going to air this interview on both shows. Nick, you are known as the sweaty startup guy. You are known as a very large, sometimes controversial Twitter influencer.
- [05:26]
Will Smith
You're known as a self storage entrepreneur.
- [05:29]
Nick Huber
You very publicly bought an eight figure.
- [05:32]
Will Smith
Business and we're going to unpack that.
- [05:34]
Nick Huber
Deal in a lot of detail.
- [05:37]
Will Smith
And you were a personal influence to me Nick.
- [05:40]
Nick Huber
When I first heard your sweaty startup message that there was this entrepreneurial path that was not tech and vc which we all know grabs an outsized share of the headlines. I really needed to hear that and I'm not overstating it to say that it changed the trajectory of my career and I know it has for many others as well. So thank you sir for that message and for amplifying it so effectively in the world. Case in point, you recently published a book on that topic and we'll want to hear the thesis of the book, the message of the book in your own words here Nick. But before that, a selfish question from me. At 350 episodes about buying businesses, I'm often told that I should Write a book. I reflexively resist the whole idea, why did you do it? How has it gone? I know it's early days, but tell us the kind of, the personal story behind deciding to write a book.
- [06:36]
Nicholas James Huber
Yeah, it's an organized message to myself is what this book is. People think it's for everybody else. This is reminders to me on how to run a company. And it's what I really wish I had in my hands when I was, you know, in the early stages. And yeah, you should absolutely write a book. It was very difficult. I grew as a person. It was harder than I thought. Like almost everything I've ever done in my life, but it's been rewarding. I. It did not make the New York Times list, which I thought it was going to. Sales have slowed way down after the first week. So if you're doing it to make money and if you have expectations around it, I, I don't suggest writing a book. But if you do it, if you want to do it to get better, to have a new intimacy with your audience, I can already feel an energy, a different energy with people who are direct messaging me. Then I, then I suggest it.
- [07:27]
Nick Huber
And was that your. So that's you reflecting back. But to do it initially, did you think it would make you money or, or spread the message further?
- [07:37]
Nicholas James Huber
Yeah, I mean, I got a, I got a half a million dollar advance from HarperCollins to write the book, which also added stress because now I feel like I need to deliver for them. It's almost like they invested in me. We have a lot of work to do to make it profitable now for them. I'm, I'm confident that we can do it over time. But, you know, they thought I could, they thought I could be a New York Times bestseller with a, with an advance like that. And I'm not. So there's a little bit of pressure. There's a little bit of pressure there too.
- [07:58]
Nick Huber
Yeah. Yeah. Well, appreciate the, the candor, Nick. And so now do please tell us, for those who don't know you, a lot of people listening will already, but what is the central sweaty startup message? You do a lot of things now, but that's really what kind of what puts you on the map. And it remains one of your central messages to people when you walk through.
- [08:17]
Nicholas James Huber
Any major city in America. If you took a microphone and put it in somebody's face and said, what does entrepreneurship mean to you? 90% of them will say the same thing. New ideas, new inventions, new products, shark tank tech, you know, a new piece of technology raising money. San Francisco. Mark Zuckerberg. Elon Musk But I've met a lot of wealthy people. So have you. 95 to 99% of the wealthy people that I know, and I'm talking generational wealth through entrepreneurship, did not go that direction. They started sweaty startups, boring businesses. They out executed, they out operated. So it's kind of messed up to me that 95% of media is dominated by one type of entrepreneurship, but 95% of wealthy people went a different direction. So this book is an official call out to entrepreneurship culture.
- [09:04]
Nick Huber
Yeah, you know, it's, it's funny, Nick. Boring businesses has become a thing now. So it's a, it's a, it's a theme, it's a meme. So it's, it, it may feel like old news to people, especially listening to these podcasts, because, because Acquiring Minds and Minds, you know, in Mind's Capital podcast, it's all lower middle market businesses. So it's, it's people who are well aware of the opportunity in boring businesses. But as recently as whatever, 2015, 2017, this was news. This was, this was really eye opening to people, this message, as I said, as it was to me. Yeah. One other thing I'll just say is that a lot of my, there's, there's been a pattern on Acquiring Minds among my guests where they, they've had this epiphany on their own. And there's actually a very specific pattern that's come up multiple times where they caddy at their local country club, they see the members and, and, and ask, you know what? Or ask around, how are these people wealthy? And it's always boring businesses. And they have this epiphany on their own. And it's this, it's this funny, Pat, you must have had that experience. You just kind of said it. But it's so, so there are those people who have it themselves, the epiphany themselves, but it's usually because they like worked at their local country club or something. So it's kind of, it's kind of fun. But the, but there's an epiphany moment. Some people have this epiphany moment where it's like, oh, it's, it's not Zuckerberg only. That's not the only path.
- [10:22]
Nicholas James Huber
The people that reach out to me weekly with the epiphany, unfortunately, are failed tech founders. They have went the venture capital route, they have tried to succeed against all odds. They have raised the money, they have tried to change the world and now they're, they learned a lot, they're in a great spot but they're ready to go do something that's profitable.
- [10:44]
Nick Huber
Yeah, exactly. Well, Nick, we want to get into this deal that I touched on. But, but just before we do, give us just quickly if you could, your bio in two minutes.
- [10:54]
Nicholas James Huber
Yeah. So went to, went to Cornell University to run track from small town in southern Indiana. Two middle class parents, didn't own assets or businesses or rental properties. Growing up. Met my business partner senior year, started a pickup and delivery storage business called Storage Squad. The hardest business in the world. Six years later we were at you know, 25 major colleges, 12 states, 14 locations. We picked up and delivered 7,000 plus students a year, 50,000 plus items, 200 plus part time employees, a lot of different warehouses. It was a brutally hard, logistically challenging business doing storage for students when they left college. 2015. 2015 we ran terrible clientele by the way. The worst I, I was forged at under fire as an operator in that business. And what I thought was the money that I was doing it for was actually the skill set. It turned me into an operator. Turned it. I learned a lot of those really hard lessons when the stakes were lower in business, which I'm super, super thankful for. Also met my business partner Dan Hagberg who has been a massive positive influence on my life and financial status. So 2015 we realized that that was not the business we wanted to be in forever. There was only so much opportunity there. We built our first self storage facility from the ground up, upstate New York. $2.9 million all in basis on that deal. And in that one changed our life. I mean we did it under some very. We went into private equity knowing nothing about what a promote was, what a carry was. We had a very wonky structure on that very first deal which we can touch on. But that deal changed our lives. It's worth $10 million today. We still own it. We've done some cash out refinances. Then we bought some more storage and realized real quick we want to sell that first Storage Squad business. We did so you know, seven figures and a little bit of change as an exit into that in that business in early 2021. So we were full time storage. Bought a lot of self storage facilities in 2020. 2021 we have 63 properties now, 50 employees. You know Bolt Storage is the majority of my net worth. 2021 I got involved in somewhere.com as an affiliate customer at first. A year later I bought in as a minority equity partner, 15%.
- [13:17]
Nick Huber
And what is Somewhere.com?
- [13:19]
Nicholas James Huber
Somewhere.Com is an international recruiting company. And I Also, I have 325 employees across my portfolio. I have 22Americans. The rest are international. In Bogota, Colombia, Sao Paulo, Brazil, Mexico City, you know, Cape Town, Johannesburg, Manila, all over the world, Cairo, Egypt. So we can talk about all that. But that business changed my life and how I build businesses. 2022, started a company called Re Cost Seg, a cost segregation firm. And it's grown to be very large. 50 plus employees, 750,000 plus a month of revenue. A lot of potential now that 100% bonus is coming back in the new, in the new tax laws. But yeah, man, started eight other companies in there. We shut a couple down. And then in 2024, May 1, 2024, about a year ago is when, you know, I closed the big deal to acquire majority interest in somewhere.com awesome.
- [14:18]
Nick Huber
Thank you for that, Nick. And we're gonna, we're gonna double click on a lot of that, but two quick follow ups. I don't think you mentioned Twitter in that.
- [14:25]
Nicholas James Huber
I started the Sweaty startup podcast in 2018 because I was doing some mentorship calls with my brother. He was running a lawn care company. I'm like, you know what? I'm gonna start a podcast. I went all in like I do on any given hobby and I didn't get anybody to listen to it for about a year. My friend Moses Kagan found me on Reddit trying to get people to listen to my podcast and said, nick, you gotta come to Twitter. Gotta come to Twitter. Like you're built for Twitter. And I ignored him. I was like, no, that's where people get mad about Donald Trump and complain about referees. I'm not going to Twitter. He actually called me again three months later and said, nick, like I'm saying this because it'll change your life. Come to Twitter, talk about your deals, do what you do. And I did. And he, quote, tweeted my very first tweet on Twitter and said, you got to follow Nick. He had maybe 3,000 followers at the time. And then it was just up into the right from, you know, the good old days of Twitter, which are not here anymore as far as getting, you know, getting followers. But yeah, Now I have 400,000 followers. I've, I've met people who have invested 50 million-plus into my, into my businesses and my deals, I've hired through Twitter, met Marshall Haas, the founder of Somewhere.com through Twitter, met Mitchell Baldridge, my co founder at Ari Cost through Twitter. It's changed everything about how I do everything. It basically accelerated my career 50 years in a five year span.
- [15:41]
Nick Huber
Well, we're, we're certainly going to spend time on that. And I actually was just on stage doing interviewing Moses at SM Bash a month and a half ago. We talked about Twitter, we talked about his relationship to it. You both say the same thing.
- [15:54]
Nicholas James Huber
What a great human being.
- [15:55]
Nick Huber
Yeah. Oh yeah. Moses is a gem and so solid character. But you both say that the Twitter when just comment on how much Twitter has changed and, and how the opportunity kind of is, is gone. At least with the current algorithm. We'll get there. One last question for the Acquiring Minds audience listening. Nick, I heard you say that you're. I want to call it a moving business, but you were calling it something else. Your first business, pickup, what was it?
- [16:23]
Nicholas James Huber
It's, it's, it was called Storage Squad. It still exists today. Zippy Shell bought it and it does pickup and delivery storage for college students when they go home for the summer.
- [16:32]
Nick Huber
Pickup and delivery for college students.
- [16:35]
Nicholas James Huber
That.
- [16:36]
Nick Huber
It was a brutally hard business. So one of the things about boring businesses and the, and buying them and the trend that critics will point out justifiably is that becoming an owner operator of a small business is not pushing numbers around on a spreadsheet. It is the word in fact that comes up most often is in fact brutal. Now I mean, we could spend a podcast on this subject. But, but in your, in your advocacy for sweaty startups, but also basically wanting to get out of your own sweaty startup, how do you reconcile the two?
- [17:17]
Nicholas James Huber
It's my fear. My fear is that through my work on these podcast interviews, my own podcast, my own newsletter, my own X, is that I generate a era of entrepreneurs that end up 10 years in to not owning a business, but owning a job. A job that controls every hour of their life with addiction problems in a wake of broken relationships behind them. That's my fear. Because this is humbling, it's brutal and people don't talk enough about why it's so hard. I tell a lot of those stories in the sweaty Startup book. But yeah, you hear and you see the entrepreneurs bragging about their wins. You don't hear about the fact that I was during a busy season in Boston. I lost 20 pounds in a four week period because I wasn't eating. I was sleeping on a warehouse mattress of one of our customers. I was, I was, I was chafing so bad between my legs that I was bleeding. I had a mental breakdown a couple days later on the side of the road because four really expensive bad problems happened at the same time and I didn't know what to do. People don't talk about that stuff.
- [18:26]
Nick Huber
Well, we try to. There's actually a theme on acquiring minds of the fetal position moment as it.
- [18:33]
Nicholas James Huber
For me, that was it.
- [18:34]
Marshall Haas
Yeah.
- [18:34]
Nick Huber
Yeah, it sounds like you had one and one of the guys, one of.
- [18:37]
Nicholas James Huber
The guys drove my truck under a bridge and ripped the top of it off another one put diesel fuel or gasoline in a diesel fuel engine and a third one, sideswipe to BMW in Cambridge, all within a three day period. All while our customers were calling me and we were having a ton of just operational headaches and yeah, fetal position moment on, on, you know, Buzzwell street in Boston University South Campus.
- [19:00]
Nick Huber
Not that you remember the exact location or anything.
- [19:02]
Nicholas James Huber
I do right there on the corner store on Boswell street and in I think it's Newton, Mass. Yeah, Brookline actually.
- [19:12]
Nick Huber
Brutal indeed.
- [19:14]
Nicholas James Huber
Those make you stronger though. I mean look, the I think the amount of money that you make in this world is directly correlated to the amount of stress and uncomfort you can put up with. And I'm very good at putting it up, putting up with it now.
- [19:28]
Nick Huber
Running.
- [19:28]
Will Smith
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- [20:40]
Nick Huber
This someware.com deal because it was very high profile. I saw it all over Twitter. I was already aware of someware at the time when you bought it.
- [20:52]
Nicholas James Huber
It was called Support Shepherd.
- [20:55]
Nick Huber
Support Shepherd. It was kind of the the highest profile, most well known, outsourced to the Philippines, other countries as well, but it was known for offshoring to the Philippines kind of agency. And really this is an independent sponsor deal. Whether or not you would apply that label to yourself. You, you found a deal, found a business that you wanted to buy first and, and then figured out a way to raise that money and do it.
- [21:22]
Will Smith
And do the deal.
- [21:24]
Nick Huber
So give us first how the deal came across your desk, how it came to be.
- [21:29]
Nicholas James Huber
Yeah, the I became a customer of it in 2021 where I hired five Filipino customer service reps to work at my storage company. I then used somewhere.com to build my storage private equity company over the next year and started hiring in Colombia and in the Philippines. 2021, I was an affiliate. I was talking about it online. I was driving a ton of business to it. I went to Marshall and we negotiated a deal for me to buy 15% of the business. So I became a 15% partner in April 2022. This was when the business was five times as large as when I got involved at the beginning from maybe 30, 40, 50 grand a month of revenue up to about 250 grand a month of revenue. When I became a minority partner a year later, it had, you know, almost tripled in size again. Sean Paris came in and I got diluted down to 12.75%. He bought 15% of, of somewhere.com and then the business continued to accelerate and grow. And in April 2020, no sorry, November 2023, Marshall, the majority owner, Marshall Haas called me and said hey Nick, I don't have anything in writing like this is very early stages. But Andrew Wilkinson at Tiny has vocalized interest to acquire 51 of somewhere.com for out of at a 47 million dollar valuation. What do you think of that? Would you want to sell half your shares? And it's one of those moments in my career where, you know, as a small town kid from Indiana taking you know, $3 million off the table, that's not generational wealth, but that's life changing money for a guy like me. I instead spent the next two months convincing him to sell the majority of the business to me instead.
- [23:25]
Marshall Haas
What was the reason back in 2021 that he let you buy 15% because.
- [23:32]
Nicholas James Huber
He knew that if I left and started a competitor he would, the business would not grow as, as much as it was today. So it was a very, very good deal by Marshall to do that. Looking back, I probably should have started my own, but he's also a great operator and he had a ton of value. So I think it was a win win situation.
- [23:53]
Nick Huber
It was carrot and stick. It was Marshall. I might start one of these because I have an incredible audience to drive to it. So don't you want me to drive that Audi, drive that audience your way instead?
- [24:02]
Nicholas James Huber
Yeah, exactly. And I think by, you know, a year later, it was my number one source of income, frankly. I was, you know, 30, 40, 50 grand a month of income coming into the business, coming into me personally from this business. So life changing.
- [24:15]
Marshall Haas
And then the business continued to grow. And now you had a vested interest in it growing as well. How were you involved beyond marketing it and advertising it on your social media?
- [24:26]
Nicholas James Huber
Yeah, I was a customer of it. I was building now all of my companies. We, we had expanded to Latin America through kind of my urging, but operationally I was not involved. They. Ben Sermon was the coo, a very, very good operator. Marshall was the CEO, and they did their thing until I acquired the majority interest.
- [24:46]
Marshall Haas
And so when he got this offer From Andrew Wilkinson, 47 million was it to buy 51%. How did that play out to clarify.
- [24:58]
Nicholas James Huber
$47 million enterprise value acquiring 51%. And it was, it was, there was early discussions about how it would look, it would be some stock, it would be a little bit invested over time, but it, it was pretty much became an open conversation. It wasn't me on one side of the table, Marshall on the other side of the table, Andrew over here. It was all of us talking together about how to do this because Andrew needed me to be in the business to make it work long term. Right. And we kind of worked together about. Hey. And actually, in the end, Andrew kind of lost interest in the business because he got very afraid of the AI risk, artificial intelligence risk to, to what we do.
- [25:38]
Will Smith
But when he was still interested, Andrew.
- [25:39]
Nick Huber
Wilkinson of Tiny, he needed you again because of your Twitter distribution. So this was right.
- [25:45]
Nicholas James Huber
Yeah, he would, he would, he wouldn't let me, but sell all the way out. And I wasn't even sure if he was going to let me sell 51% out because he needed me to have a vested interest in growing the company. For sure.
- [25:56]
Nick Huber
For sure. You had really become strategic to the business. You're promoting it on Twitter.
- [26:01]
Nicholas James Huber
Yeah, I was sending 20 to 30% of the company's revenue to the business with my audience.
- [26:07]
Marshall Haas
And so at this juncture, the founder, he's swaying this offer from Andrew, who's trying to navigate some kind of deal structure where you are still involved, but instead of kind of playing along on this, you come in with a counteroffer. So how did this play out? Did you have to go higher in price or could you in fact go lower because you had the strategic angle?
- [26:31]
Nicholas James Huber
It was about the same value it was going to be more cash, less stock. So that was kind of the advantage. But again, it was me and Andrew talking about how we might put this deal together, to deal together, together as well. It wasn't me against, it wasn't me against him. It was maybe, maybe Andrew comes in and, and you know, does the takeover and I am involved in, in a bigger way as well almost. He's like an investor in the deal. There were so many moving parts of how to structure it, what to do. And Marshall's first question obviously was where are you going to get 20, 20 million? Like this doesn't make any sense, Nick. How are you going to pull this off?
- [27:07]
Marshall Haas
And so instead of selling down, this became a conversation about, okay, how can Nick get involved almost like a co sponsor with Andrew and we do this together, cash out Marshall a little bit so that he gets a good payday and then we get an increased strategic interest in this asset that we so believe in and are building our businesses around.
- [27:26]
Nicholas James Huber
Exactly right, exactly right.
- [27:28]
Nick Huber
And Nick, you wanted to become an owner or more of an owner or you know, didn't want it to go all the way to tiny because you just believe you were such a believer in the business and this was just an opening to start, you know, talking about maybe becoming the owner.
- [27:43]
Nicholas James Huber
Yeah, I wanted, I thought that this was the first business that I had been involved in that had $500 million revenue potential. You know, over time, obviously this has, this is a business with a model that's proven. There are 100 plus companies in the United States that do this and make more than 100 million a year of revenue. Big, big industry. Big, big industry. The demand is not going to stop in my opinion. So yeah, I thought, I don't want to own less of this. I want to own as much as possible. And man, I think the common theme throughout my career from doing that very first uniquely structured storage deal to raising the money in the storage business from the beginning is I have almost irrational confidence at times and that I can just, that I can do it, that I can do it. I think my dad instilled that in me as a kid that hey, like nobody's going to give you permission to do this, but if you believe in something, don't be afraid to take the big bets. And I thought I would, I would regret, you know, when the bell was ringing someday on the, on the New York stock exchange and somewhere.com is going public, I would probably regret selling a lot of equity and not taking that swing.
- [28:53]
Nick Huber
And Nick, when you talk about say.
- [28:55]
Will Smith
The stat again that there are a.
- [28:56]
Nick Huber
Hundred other companies in the US doing over 100 million in offshoring. Did I get that right?
- [29:01]
Nicholas James Huber
That's a true stat I made up. It's one of those. There's a lot of very large businesses. A lot. There are at least 100 companies in the United States doing exactly what somewhere.com does that are larger than somewhere.com. there's full skyscrapers in Manila and Johannesburg and Cairo and Mexico City and Bogota of companies that are doing this at scale, much more mature than us.
- [29:27]
Nick Huber
And certainly, yeah, offshoring is a 30 year old story. You know, we hear about every. I think, I think that some of the earliest stories were developers. Maybe that's my tech orientation again. But you know, developers in India for example, have been happening for decades. So what, what is the market positioning of somewhere? Is it. Is this like SMBs are only now starting to take advantage of it? Where is the niche of somewhere versus this kind of big corporate offshoring? That's an old story.
- [29:58]
Nicholas James Huber
Yeah. The niche is that we are building. It's finally an area. We read the world is flat book back in 2002 or three when that came out. But it is. Technology is finally to a place where you can truly have a worldwide diversified team operating in sync with no bpo, with no business process outsourcing firm in place to handle everybody. I can run a company right here from my basement in Athens, Georgia with Slack, with Notion, with Asana, with Fathom, with G Suite. I can run a company right here with my finance department split between Cairo, Egypt and Johannesburg, with my sales team in South Africa, with my admin back office in the Philippines, India and Pakistan, with my developers in Eastern Europe, with my operations managers in Colombia, with my legal team in Colombia, with my HR department in Sao Paulo, Brazil. So we have a company now that there's teams of recruiters that work with each of our clients that can build a truly worldwide team and tell you where the best talent is in the world and have you go get them and then there's no ongoing fee. We're one of the few where we pay an upfront. They pay an upfront fee for us to find somebody, then they own that relationship instead of paying 1500 two grand a month upcharge, you know, to handle compliance basically. So yeah, it's, it's just much easier to build a worldwide team now.
- [31:21]
Marshall Haas
And so as a client, you've seen this firsthand with your self storage business and you have 50 employees there. Many of them are remote so how does that manifest in the operational expenses?
- [31:34]
Nicholas James Huber
Oh, so, I mean, first of all, since I acquired. This is a very complex story, so I hope people can follow. When I acquired somewhere.com, it was called support Shepherd. I bought somewhere.com for $400,000. Change. Changed the domain name of the company, rebranded it. That's risky. 80% of the placements were in the Philippines when I bought the company. Today we are 40% South Africa, 40% Latin America, and less than 15% Philippines. So we've made drastic operational changes to the company since we acquired it. That comes with challenges, which we can discuss. But in my own businesses, everybody thinks, and I thought for a long time, that if you want somebody to do repeatable tasks and answer the phone, hire somebody in the Philippines for 800 to 1,000 bucks a month. We still have a ton of phenomenal Filipino employees. We're not going to ever stop hiring there. But we've had a new look at where in the world we can find very specialized talent for sales, for finance, for operations. That has been a total game changer for our clients and my businesses, frankly, like just how I build and how I think about businesses and sales. Sales is, you know, a very stark and clear example of that. At my storage company, Bolt Storage, we had a full Filipino based call center to rent storage units. We were converting new clients who called to rent a storage unit. We were converting them at 32%. If 100 calls come in, 32 of them become our customers. We rebuilt our sales team and our customer service team in South Africa, and our conversion rate's 41%. Now. I don't know if you can conceptualize the power of what that means at scale, but we have 15,000 units. The phone rings 200 times a day. We have $100 million worth of real estate. That depends on revenue and stuff from this business. The public store, the publicly traded storage companies, extra space, storage, public storage. They posted year over year revenue decreases. In Q1, our revenue went up 14.1%. Our net operating income was up over 20% in Q1, year over year. Massive, massive, massive, unspeakable value to my business. To increase my conversion rate from 28 to 30, 30, you know, from 32 to 41%.
- [34:05]
Marshall Haas
So that's on the, that's on the revenue side. You've increased your closing rate from 32% to 41%, roughly a 30% increase just by switching the dynamics in the sales force. So massive jump on revenue that can come from that by having more specialized staff. What about on the cost side, I have to imagine there's a benefit to there as well. That's the whole point of offshoring for most.
- [34:29]
Nicholas James Huber
Yeah, we have, we have a real estate private equity company that manages 300 plus investors. We do investor relations, we manage 16 bank relationships. Now we have 20 plus open deals. @ any given time. I can run my entire PE company, management company included, with 50 employees for $1.5 million a year. $1.5 million a year is my overhead as a business. My competitors here in the States. My friend runs a very similar sized shop in Atlanta with $5 million a year of annual overhead. So it just decreases the risk. It allows me to hire head of revenue, it allows me to make a profit through really difficult times. We can talk about how difficult the last three years have been in the real estate business and how this frankly kind of, it saved US as operators.
- [35:17]
Marshall Haas
So 1.5 million of OPEX versus 5 million for a similar sized competitor. This is a 70% reduction in overhead. You know, just. Can you elaborate on what that means for your competitiveness as a business?
- [35:32]
Nicholas James Huber
I would not be able to operate this many storage facilities with the fees I charge my deals, the management fees I charge my deals. If I were hiring only Americans, I would not be able to. So yeah, it's, it's the difference. Like we were able through the last three years of brutal real estate environment, we were able to toggle off management fees at four of our deals, turn them off and it's fine, we're still break even or better as a management company that is, it's a game changer.
- [36:01]
Marshall Haas
So this is an example where because your overhead is so much lower, you can provide a lower price to your customers, you can provide a better investment prospect to your investors and you can take home a better economic deal for yourself as a sponsor because you're putting all of this together.
- [36:19]
Nicholas James Huber
Yeah. And I think it goes without saying, but if I, I now think about hiring and building divisions of my company on a worldwide, at a worldwide level. So I'm going to, I'm going to go find an analyst in Cairo, Egypt who can work magic in Power BI and Microsoft Excel for $700 a month. Because Cairo is the most affordable city in the world to live. I can find a salesperson who speaks perfect English with a smooth British accent for two grand a month. For account executive, $200,000 a year U.S. equivalent. Right. Operations, talent, legal assistance for 1500amonth in Bogota, Colombia. It's, you know, developers in eastern Europe for 3, 45 grand a month when you're paying 200 grand in the United States. It's, it's a, it's my ace in my back pocket when I acquire companies and when I build my businesses.
- [37:09]
Marshall Haas
Does it also drive what kind of businesses that you will buy and start in the future?
- [37:15]
Nicholas James Huber
I think it does, yes. I'm, I'm invested in a pest control business. They didn't do 24, 7 customer service. They didn't have trained salespeople with a sales focus on their, on their phones. We're running the same plays, we're running the same plays at every business re cost seg. We're hiring aggressively for sales talent in South Africa somewhere. Our account executives are now South Africa. So it's, it's my, it's my strategy, it's my playbook now to acquire companies. Now am I going to acquire another company anytime soon? No, no, we can get there. But yeah, it's a different way to think about building a business for sure.
- [37:48]
Marshall Haas
And it plays particularly well to labor intensive businesses. It sounds like.
- [37:54]
Nicholas James Huber
Oh and even, even back office of in person businesses. Yeah, like there's no reason to pay an accountant 125 grand a year or a controller of your business 200 grand a year. When I have a head of finance in Joburg who ran a 300 person company and he $4,800 a month to, to be my controller at one of my companies.
- [38:13]
Marshall Haas
I was surprised to hear you mention a pest control company as the first example because that's field employees which you really can't have remote. That's the whole point. But you're saying the back office element and the call center element can be outsourced and in there you can save money and also provide better quality by being 24 7.
- [38:30]
Nicholas James Huber
Oh you're, you're like, let's just work through the funnel. Your digital marketers are in, are overseas. Your call center obviously in sales is overseas. But your billing, your logistics, the people who make your routes like collections. Then your finance arm of your business with financial planning and analysis all the way through to revenue operations like follow up sales. You know, enablement is a massive division of these large companies. There's no, there's no limit to who you can find. And I thought five years ago that it was a assistant to do repeatable tasks. So yeah, the game is changing in my opinion in a unique way.
- [39:07]
Nick Huber
You would think that sweaty startups would be the type of business where offshoring doesn't make sense. It's in the name. Sweaty implies in person, local service delivery. But really as you just took us through it, what you realize is that in sweaty startup or super hyper local in person field style businesses, indeed the service delivery is local and physical. But basically if you really examine the organization, almost everything else doesn't need to be.
- [39:40]
Nicholas James Huber
Yeah, I operate 63 self storage facilities. There's nothing sweatier than 15,000 boxes that need to be swept and spiders out of and mice out of and people moving in and out and leaving garbage and snow removal contracts and electrical repairs and gate repairs and landscaping. My team in Colombia does full property management. They speak Spanish. They speak to half of our vendors on the phone in Spanish. It's. Yeah, technology is pretty insane right now for what you can do remotely.
- [40:13]
Marshall Haas
But so how do you go about this? Just hiring one or two people on upwork doesn't seem to kind of move the needle very much and it's hard to find the quality maybe on the first try. So, so how do you go about mastering this remote workforce?
- [40:29]
Nicholas James Huber
It's really hard. And, and you don't have to use somewhere.com. this is not a pitch for somewhere.com. do a typing test for anybody that you hire internationally. Typing speed. We get 30,000 to 40,000 applicants a month at somewhere.com 30 to 40,000 applicants every single month that want to work. 90% of them can't type over 40 words per minute, which makes them virtually incapable of running a, you know, working for a remote business. So do a typing test at the beginning. Give them some test work. Make sure that if they're in an area like South Africa where there's rolling blackouts and, or the Philippines where there's monsoon season and hurricane season, you got to just. There's a lot of logistical things to worry about and you know, but the typing test is number one. Like make them do a typing test.
- [41:15]
Marshall Haas
And so what are the thresholds? What speed do you need to type at for various positions and what do you type at?
- [41:21]
Nicholas James Huber
I type 100 words per minute. I hire anybody over 40 words per minute, executives over 60, you know, obviously admins, customer service who do typing, you know, queries much higher. But yeah, it's, it's tricky. The Philippine, Philippines types a lot faster. Latin America types the slowest. In general, South Africa, there's just a massive disparity. A bunch of people who type 20 words per minute and a bunch of people who type 70, 80. So it's directly correlated to work performance though from a remote team.
- [41:54]
Will Smith
What do the following acquiring minds guests.
- [41:56]
Nick Huber
All have in common?
- [41:58]
Will Smith
Doug Johns Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum. They all went through the Acquisition Lab, the accelerator in community for people serious about buying a business. But they represent just a sliver of the Lab's success stories. The number of deals across the Lab's cohorts now stands at over 120, with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build, the book that introduced so many of you to the very idea of buying a business. The Lab offers a month long, intensive, almost daily Q and A sessions with.
- [42:40]
Nick Huber
Advisors, live deal reviews with Walker, Deal.
- [42:44]
Will Smith
Team introductions, and an active community of serious searchers. Check out acquisitionlab.com, link in the notes or email. The Lab's co founder, Chelsea Wood. Chelseaivethivethiveandbuild.com.
- [43:00]
Nick Huber
Great, Nick. Well, thank you for kind of explaining the whole value here of somewhere.com. let's turn our attention back to the mechanics of how you actually put this deal together. Can you, can you kind of give us the outline there?
- [43:17]
Nicholas James Huber
Yeah. So I was, I was in a dilemma because I'm used to the real estate business where, you know, you do a 7 or 8% preferred return and then you get a 30, 40, 50% promote, which is a carry in the. We, we call a carry a promote in the real estate business. I realized after two or three meetings with capital investors for small business that there's no such thing as a 50% promote cap. The cash calls the shots. So if I was going to acquire 51% of the business after you take out me and Sean, who don't want to exit, if I'm going to buy about 40% from Marshall, I'm going to raise 20 million bucks to buy 40%. But after it's all said and done, I'm going to own an extra 8% of the business because I'm on a 20% carry. So I'm going to go from 12.75% ownership to, you know, 20.75% ownership and I'm going to raise 20 million bucks. I'm going to put my reputation on the line and I'm going to go through the headache and stress of buying this company. Would you do that? I decided that no, I have to find a way to get more upside for myself in this business. So it was not necessarily a retrade, but it was kind of me going back to Marshall and saying, hey, look, I need to buy more of the company. You know, buying 39, 40 of it does not work for me. I need to acquire like 58% from you to make this worth it. And it all needs to be from you because I don't want Sean to be deluded because he's sending a lot of clients. You own, you own about, you know, 70%. I want to acquire, I want to acquire 58% from you. So he had to come to terms with giving up more of the business. And what we ended up settling on was a 39.25% equity tranche from investors. 20, $20,300,000. What I'm going to buy outright, 39.25. So the value of the business over the three years, three months of negotiating, it accelerated. We just settled on a 52 million dollar valuation versus 47 because the business had started to grow. 39.25% in a private equity tranche where I'm going to get him cash, but then I need an 18% seller note on top directly to me. Directly to me. That's collateralized by the business itself. And there's an acceleration in the interest rates. There's a very, there's tax implications of that that I had to think about as the distributions came out. After I paid interest, it was all taxable income to me, so I couldn't pay it, pay principal down with all of that. I had to, you know, withhold 50% of it to pay taxes with. There's a lot of complexities to the deal, but I had to figure out how to, how to make it worth it for me. So what I ended up doing was I owned 12.75% outright. I did an 18 seller note from Marshall directly to me, and then I did two private equity tranches, one with a 20% carry because they invested more than a million dollars in the deal, and one with a 30% carry if they invested under a million dollars in the deal. So those blended together, it was about 32.96% with a 20% carry, 6.29% with a 30% carry. Blended it was 6.5% for one, 1.8% for the other 18% seller note, 12.75% I already owned. If the deal went well and I got everybody paid back, I would own 39.229% of somewhere dot com. And that for me was worth it.
- [46:38]
Marshall Haas
So let's unpack the sources and use this a little bit in what you just laid out there. And thank you for the transparency. That's awesome.
- [46:44]
Nicholas James Huber
Yes. About 9, 9 million and change that I borrowed from Marshall that Money didn't technically change hands, just the equity changed hands in exchange for a promissory note that the company was collateral for but.
- [46:55]
Marshall Haas
Of 100% of the stock. Prior to your transaction, you own 12%. So you're rolling that. Sean was rolling his 15%, give or take, and then Marshall was rolling some percentage of his. So in total, the rolled equity was roughly 30%, is that right?
- [47:14]
Nicholas James Huber
Yeah. Marshall still retains about 13.5% of the company.
- [47:18]
Marshall Haas
And then the buyout element here changing hands effectively was 70% of the business, of which 50 of those 70 was a pure kind of cash payout, ended.
- [47:30]
Nicholas James Huber
Up being 58.25% of the business that changed hands.
- [47:34]
Marshall Haas
Okay.
- [47:35]
Nicholas James Huber
Because now I'm 70% control. I already own 12.75. So 70 minus 12.75 is 58 point or 57.25%. Yes, 57.25 is what changed hands. 18% of that seller note, the rest cash.
- [47:50]
Marshall Haas
Right. Okay, bear with me here. I have follow up questions, which is why I need to get to the bottom of it. So 58% is changing hands, 42% is rolling after 58% rolling cash. I think about two thirds of that was the private equity portion, as you call it, which was funded by equity investors. And then the 18 percentage points, I think roughly was a seller note that Marshall provided. And this was directly to you as a buyer. So you bought 18% directly with a seller note instrument, and then investors, which you sponsored as the sponsor, where you had somewhere between 20 and 30% carry, was bought by outside investors. Do we have that right?
- [48:33]
Nicholas James Huber
Absolutely right.
- [48:34]
Marshall Haas
Give or take. Okay. And so then you say that within each of these elements, you had different financing terms. So first of all, you had a seller note that you kept separate. I have to imagine that you disclosed that to the investor, that, hey, you're getting no leverage, no benefit of this side tranche here. But I'm doing it in order to effectively as part of my GP compensation, because otherwise it's not worth it to me.
- [49:01]
Nicholas James Huber
Yeah. And the seller note had to have no adverse effect on the equity that was acquired. Meaning Marshall can't claw back or get first right to any cash flow or have any retaliation to the entire company. Right. He could only claw back that 18% equity in the event.
- [49:17]
Marshall Haas
Right. Okay, so it's junior to the other 80% of equity, which is then preferred or senior in some way. I haven't really heard about this before. Where a sponsor effectively carves out the seller note and takes that as a benefit for himself. So that's very innovative and creative. Was that controversial in any way?
- [49:38]
Nicholas James Huber
Not really. I had, I, I just told the equity investors that story of, hey, look, like I don't want to buy this thing and put my name on the line and raise all this money for an 8, for an 8% upside in this. Like I'm going to be way too involved putting my reputation on the line. There has to be a carrot for me. And yeah, I met with, I met with 100 investors to raise the money from 38 people. So several of them didn't like that I didn't put a lot of cash in, for example, or they didn't like the seller note aspect.
- [50:08]
Nick Huber
So yeah, why would the seller note be something that investors don't like? I'm, I'm missing that. Or because they're not participating in the leverage.
- [50:15]
Nicholas James Huber
Yeah, they might want the juice of that seller note instead. Even though it was essentially for investors, it was not really in existence because the equity is treated just like their equity. But yeah, they would want the juice from it.
- [50:29]
Marshall Haas
But the pay down of the seller note is that paid out of just 18% of the cash flow or fully paid down by the company overall.
- [50:36]
Nicholas James Huber
That's, that's the, the difference is that it's only that 18% equity that can pay down that note.
- [50:41]
Marshall Haas
And so where other investors get dividends, your dividends go towards paying this down.
- [50:47]
Nicholas James Huber
Correct. My 12.75% still comes to me in cash. That 18% goes into a separate account, pays the note, pays the note interest first. And then there's a tax. There's 15% of it is put in a tax account that I can only use to pay taxes. And 50% is used to pay Marshalls pay equity on top every single month.
- [51:08]
Marshall Haas
Right. So there's still no juice for the investors, but at least they're not harmed by this instrument on the side.
- [51:14]
Nicholas James Huber
Correct.
- [51:14]
Marshall Haas
And then for the investor side, roughly 39, 40%. You said that you had two tranches, one for big investors and one for small investors where small investors would have to pay 30% carry and 1 million above. Pay 20% carry. How did that go down?
- [51:31]
Nicholas James Huber
Yeah, I just met the market basically with, with what I needed to do. There's no pref. There's no waterfall. A lot of, a lot of investors said no because they wanted a waterfall. They wanted, you know, the, the carry to end up at 20% and you know, start at 12, tell certain multiple on invested capital, then go to 15. I just made it simple. No pref. No fee, no AUM fee. No pref 20% carry after their distributions equal their invested capital amount.
- [51:59]
Marshall Haas
Yeah, but I mean more the bifurcation of small and big investors. Because most investors like to be parry pursuit.
- [52:07]
Nicholas James Huber
Yeah, I think they're. If you're going to put a million bucks into a deal, you deserve a little bit of extra juice. And I had to find a way to incentivize folks to invest enough money for me to close this deal out without having, you know, 150 investors that I have to deal with. So my goal was incentivize people to put a million bucks in because then all I need is 20 investors to get this deal done.
- [52:26]
Nick Huber
Is that something you'd use in real estate in your real estate deals before nick that bifurcated?
- [52:31]
Nicholas James Huber
No, never have.
- [52:32]
Marshall Haas
But I do suppose you often see an anchor investor, a big family office will come in and get a discounted carry. Now of course that is discounted from the standard 20% and not that small investors pay a premium, which is how I interpreted this first. But from that angle, I guess it's right. You're saying these anchor investors, they are more valuable, they're coming in with more cash, it's a bigger commitment. So they're going to get a discounted rate to the fee everyone else has charged.
- [52:58]
Nicholas James Huber
Exactly, exactly right.
- [53:00]
Marshall Haas
And have you been able to keep everyone aligned since the transaction happened? It's been about a year now, you said. And has this deal structure worked also post closing?
- [53:09]
Nicholas James Huber
Yeah, it's worked great. It's worked great. We've had, yeah, everybody's still in the deal, haven't had any requests for buyouts. And generally speaking, I take a meeting every couple of months with investors. But largely very respectful.
- [53:25]
Marshall Haas
Thank you again for the transparency. It's awesome to learn about innovative deal structures. And last question on this for me at least is you've got what I would consider above market terms here because 20% carries market more or less. And in this case you got 30% on the tranche of the investors plus you got the seller note instrument on top of that. So massively better terms than what I would consider market for independent sponsors. How do you think that you positioned yourself to negotiate that kind of leverage?
- [53:55]
Nicholas James Huber
Yeah, it's. I had access to a lot of capital. I had 300 plus active investors in my real estate business that had have worked with us for four, five, six years and can trust us. I had a big reach through the deal to additional potential PE shops that I could go take meetings with sophisticated investors. I didn't raise money from non accredited or retail investors. But yeah, it's, it was definitely salesmanship and me having to, you know, tell people, hey, look, like here are the risks of this deal. It's AI, it's competitors, it's Twitter. Might not work as we're rebranding all these things that are changes. But, you know, if you believe in me as an operator, if you believe in the future of this business, then this could be a good investment for you.
- [54:44]
Marshall Haas
So profile and track record counts. But I have to imagine that you were already an insider and had already driven this company towards success. It's on a good trajectory. Must have helped too.
- [54:55]
Nicholas James Huber
Oh, the growth, Pat. The growth trajectory of the business absolutely helped. But I didn't have any resume of raising for an operating company, especially $20 million or hiring a CEO or building a management team. So yeah, it's been, it was, I didn't have track record. Nobody, nobody was going to say, oh, it makes perfect sense. Nick's done this before.
- [55:15]
Nick Huber
And, and how did you. So did you see that as, as pushback a lot that you're basically doing your first independent sponsor deal. You have deal making experience on the real estate side. So you're not coming in totally cold. But you're not a former finance guy. You're not a finance guy.
- [55:28]
Nicholas James Huber
Yeah, I did not hire a banker. I'm not a former PE guy. I was still calling it a promote in these meetings because I didn't know, I didn't know they call it a carry. So yeah, it's, it was very unique situation. Very unique situation for sure. And frankly, I didn't, I don't have a, I don't have a past doing this. Like, I didn't know Right. Exactly how it was to be done. Like, of course I called Brent be sure. And you know, a lot of folks who had done it, but I didn't. The pushback I got was that I, at closing, I only wired about 375 grand to buy this business and to get this seller note and to take control personally. Me personally. But I already owned 12.75%. I was already making, you know, 70 grand a month in distributions from this business. So I had a, had a hard time with that on a couple investors. But for the most part they're like, doesn't really change much here.
- [56:23]
Nick Huber
Well, and walk us through that. Actually, Nick, a little bit more on the skin in the game perception here.
- [56:28]
Nicholas James Huber
Yeah. Some investors said, hey, like what, what amount of cash are you putting in? And I said, well, at closing I'll wire 370, 370, 000. Most of it to fund an operation, operation account because the 18 seller note had to have. We needed to fund the account with a million and a half dollars at closing, just for operations. So that's 18, that's 200, 220, 250K. Then I had my other equity tranche that was kind of cash out, cash in, but you know, under $400,000 in the, in the, in the deal. And some investors didn't like that and they said no because of that. But it was a minority obviously.
- [57:06]
Nick Huber
Nick, going back to kind of figuring this out as you went along. Course, in any sponsor deal or any private equity deal, the, the returns pro forma to the investors are shown very clearly. Base case down, case up case, upside case. How did you, how do you, what did you show there? What kind of returns were you looking? Are you kind of pro forma ing out or multiple uninvested capital? What's, what's the game plan to return investors their money? Plus, plus the return.
- [57:36]
Nicholas James Huber
Yeah, it's, that's where I was totally shooting in the dark. And I made it very transparent with investors that hey, look, this business needs work. Like it's, it's a, it's a rocket ship that has a great customer base and a good trajectory. But there's going to be management changes as we get this thing ready to scale from, you know, the revenue that we were doing to the revenue that we needed to do to really grow the company. We're going to increase expenses. It was, ran incredibly lean. So yeah, it was. I did the base case and the in the bull case. But with operating companies it's not as straightforward as real estate as you know.
- [58:10]
Nick Huber
Yeah, yeah. But were you saying to them, you know, 30% IRR is what I'm projecting in the base case, were you, were you hanging, were you hanging the, the investment fundamentally on an IRR or MOIC number for them or was this more kind of like a venture style? This thing's going to grow. It's growing a lot. It's a rocket ship. I don't know where it lands, but just get, get on this rocket ship. Sort of more amorphous rather than a specific IRR or moink.
- [58:43]
Nicholas James Huber
Yeah. Our goal was not to sell the company and we made that very clear at the beginning. I, I don't want to sell somewhere. I would like to own it for a very long time. It's not, it'll never be unless we get a bunch of recurring revenue on the books. It'll never be worth more than five or six times EBITDA ever. So why would I sell something and pay a bunch of taxes for 20 for five times earnings and then deploy the capital into something that's not going to generate me a 40 yield after tax capital? So made that pretty clear with investors that this was a cash flow long term hold play.
- [59:19]
Nick Huber
And did, did you get pushback on that from certain investors?
- [59:22]
Nicholas James Huber
Yeah, there was a lot of like there were a hundred meetings with a hundred different groups an hour long. Some of them were short. They found out my, I wasn't putting a lot of cash in. I think I, I talked to Mr. O' Shaughnessy for four or five minutes and then he, he found out I wasn't putting any cash in and he said, Nick, I really wish you the best, but it goes against kind of what we're, what we're looking to do. So, so yeah, the, there was definitely a lot of very tense conversations with investors, very tense ones.
- [59:54]
Nick Huber
Uncomfortable and on the long term hold or the indefinite hold or the permanent hold you mentioned that you'd call Brent, be sure who's the name of course, who runs permanent equity. So this is right up his alley. And many sponsors that we talk to more and more it seems don't want to do the five to seven year traditional private equity exit plan. But it all sounds great in theory until you start talking to investors and LPs and they say, yeah, but when and how am I going to get my money back? Exactly, please. So what's the answer? Just basically dividending them out or is there a recap plan?
- [60:33]
Nicholas James Huber
Potentially at some point it's cash flow like hey, we're building the business here that we're buying for less than six times earnings. It's never, we're going to assume that it's never going to be worth that, but it spits off cash and we're going to do that. And if I can get all of your money back and I'm getting 40% of the cash flow of this business, there ain't no way I'm going to want to sell it either. Like, let's ride this thing.
- [60:52]
Marshall Haas
You went into this deal in your own words, a little oblivious of how private equity works. Do you think it would have helped you and given you even an even better outcome for you personally if you had been a serial dealmaker? Or do you think more knowledge actually could have hurt you in this case?
- [61:09]
Nicholas James Huber
I think more knowledge would have hurt me. Just like my very first storage deal going into real estate, private Equity. We raised money to do a $2.9 million storage development project where we raised 20% of capital for 20% equity and we took the entire banknote as our equity. And when you do that on a $2.9 million deal and it turns into a $10 million deal, you make a hell of a lot of money. Hell of a lot of money. So absolutely, if I'd have went in there with a Prof. And a promote into that very first deal, I would have made. I would be $2 million less wealthy than I am today if I'd have done that.
- [61:48]
Nick Huber
Those are self funded search terms, more or less, Nick, by the way. So just for the self funded searchers listening, understand that in the world of finance, the deal that self funded searchers get, the terms of these deals are just unheard of.
- [62:02]
Marshall Haas
Unheard of.
- [62:02]
Nick Huber
Um, you got one for yourself, Nick, but you're pointing it out as such an exception, not the rule.
- [62:07]
Nicholas James Huber
Yeah, we, we switched off of that structure very quick on like deal number four. I think we switched off of it.
- [62:12]
Nick Huber
But, but such an interesting point that Nicholas makes. That not knowing allowed you to command better terms. It is, it's kind of like part of it is just the, the sort of the ignorance of how audacious your offer was. So that's good. But on the other hand, it's. It's striking that you could find takers.
- [62:36]
Nicholas James Huber
I didn't find very many takers. I found. I found six people who had never invested in a real estate private equity deal to do that. First to that first self storage deal, one of which was the. Like I, I was so scrappy. The agent, the commercial real estate broker who sold me the land for the development was the last check in for 125k. He, the guy who sold me the land and following me through the town hall permitting and watching me work for six months to get this deal permitted to even start building was the last check in and his check cleared. And the day next day we paid the earthwork guy because we needed the money desperately. First check in was my dad with 125k. He mortgaged my household home to make that investment and did not tell me he had no business, no business putting 125k into that first storage deal. I'm very proud to say that I wrote him a check for 500k when we bought him out.
- [63:32]
Nick Huber
But amazing still.
- [63:34]
Nicholas James Huber
Yeah, he had no business doing that. I'm glad I didn't know that he did that.
- [63:39]
Nick Huber
Yeah.
- [63:39]
Nicholas James Huber
Or it would have made me even more stressed about the whole thing.
- [63:44]
Nick Huber
That's such a wonderful story. Wow. Well, friends and family money is where a lot of people start. Um, and I guess it allows everybody to just be ignorant and better than each other sort of thing.
- [63:56]
Nicholas James Huber
I think if you. If you're a good person and you're going to treat people fairly, that rubs off. But, yeah, I don't know how I commanded those. Those terms. I have no idea. There's no. There's no reasonable explanation. I wouldn't, I would never invest at those terms if I had. If I was the capital partner.
- [64:12]
Nick Huber
Yeah, but. But to Nicholas's point, it wasn't just that first real estate deal. It was somewhere as well, where. Where your ignorance of how private equity is done allowed you to ask for aggressive terms. And yet this time you were in rooms with real sophisticated people and you still got them. You still got these terms, still got good terms.
- [64:33]
Nicholas James Huber
Yep.
- [64:34]
Nick Huber
So in your case, it wasn't. It wasn't just because you go back to friends and family. It's just even sophisticated capital.
- [64:40]
Nicholas James Huber
You want to talk about how it went now? How it's going?
- [64:43]
Nick Huber
We do, actually.
- [64:45]
Nicholas James Huber
It's been brutal. It's been hard. So a couple of things happened. We rebranded the business and our SEO, our organic traffic went from 400 leads a month to zero. So we stopped showing up on search. It's finally in Q1 of this year, back to where it was when I acquired support Shepherd.com so that happened. The Twitter algorithm changed and my tweets that used to drive three to 4,000 website visitors and 200 leads don't work at all. I can't drive hardly any business to somewhere.com through Twitter posts. And the competitive landscape has exploded as well. So those three things all together accompanied with me virtually divesting from the Philippines and moving all of our recruiting to South Africa, Egypt, Latin America. A lot of operational changes, a lot of talent that the business needed has been phenomenally rewarding, phenomenally humbling. I've learned a ton about business that I thought I knew a year ago that I had no idea. I've learned a lot about building management teams. But yeah, revenue Is. Revenue in Q1 was up 26%. So, still very happy with how things are going. But it's been a wake up call to me thinking that I was going to buy this business and passively install a CEO and ride off into the sunset as the business moons. That did not happen.
- [66:12]
Nick Huber
Well, well, Nick, we talked about. I heard you say that Andrew Wilkinson's initial interest waned when he thought about the threat of AI to this, which we should talk about. But now you're making clear that another frankly big weakness to this business was the platform risk. It was highly dependent on its SEO and highly dependent on the Twitter algorithm. And if either of those change, for whatever reason, which they both did, leads collapse. Yeah, we went from pointing that out.
- [66:44]
Nicholas James Huber
We went from getting 1500 leads a month to getting 700 leads a month. Half.
- [66:51]
Marshall Haas
Wow. I was just going to take a step back there and I was thinking about it from a mind's capital perspective. So when we invest in independent sponsor deals, and we would have loved to consider this when it was up for consideration, there are four main sections. We look at market, which in this case AI is a risk. And you have brought up a couple of other items as well. Target and in Target, we like to see, you know, that it's growing, profitable, sustainable, smoat, all these common things. But more than anything, we'd like to see differentiation. And in this case the differentiation arguably was the link to you and some of the outreach it had. Sponsor. Here you have a sponsor who has delivered strong returns to investors in the past, albeit in another industry, but also a sponsor that is already an insider at the company. So this would have been a big, big plus on this deal. And then lastly, the deal terms which somewhat controversial but actually as we fleshed it out, eventually it comes across as more of an all equity deal with no leverage because the seller note is really like a side vehicle that doesn't impact. So I think we could have gotten comfortable with that as well. So that's how I would have thought about it going into it and. But yeah, as you're saying, it could seem like a slam dunk on the front end for an investor, but every small business has yellow flags and every business or there's no business that has a straight line and it's super interesting. So what has happened to revenue in particular over the last 12 months?
- [68:22]
Nicholas James Huber
Yeah, so Q1 was really good. I mean, things are, things are looking very good. I'm excited about the spring Q1 revenue. 26% growth over last Q1, which was massive. So, yeah, we're still highly profitable, still making distributions every month. But then the tariff liberation day, like there's just little things about this business where, you know, in April we had a 250k reduction in revenue over March because tariffs were put in and almost all of our physical product goods, E Com goods, direct to consumer goods, they all froze hiring. We lost 50 deals in our pipeline. We have 400 deals at any given moment in our pipeline, a lot of them paused, canceled. The pipeline behind it is really good. So it's not a long term issue for the business. But those little blips, you just don't see that in real estate. You don't see the president making a tweet costing the business 250k in revenue in one month. You don't, you don't have that in self storage.
- [69:25]
Marshall Haas
And when you're talking about deals and pipeline here, you're talking about recruiting engagements, right?
- [69:30]
Nicholas James Huber
Yeah. Clients who engage us to do recruiting. We're seeing a lot of very positive trends heading into the busy season for, for that. But yeah, it's, it's, there's always, there's always stress and I, and the more I talk to people who do this, the more I talk to Brent and I haven't actually talked to him recently. I don't want to make it sound like him and I are close or anything. I, he was not involved in this deal. As I talk to people who do this, almost all of them unanimously say, oh yeah, the first 18 months is, is if you're going to make operational changes and prepare a business for growth, like it's not up and to the right for 18 months. Like it's, it's, it's a struggle.
- [70:07]
Nick Huber
Have you been acquainted with the term J curve yet, Nick?
- [70:11]
Nicholas James Huber
Tell me.
- [70:12]
Nick Huber
The J curve, if you imagine an X, Y axis and the line on that axis, the, the direction of time and revenue, it dips before it goes up and it's kind of overused. But the point, strictly speaking, it means that you make investments when you first buy the business. So, so profitability goes down, but you're positioning it to then go up quickly after that. But, but the way people use it is just simply that the transitions into a new business absolutely sucks. There's all kinds of unforeseen stuff, new costs, new expenses that you didn't expect and things just are bad before they're good essentially, is what it really encapsulates for a lot of people. Yeah.
- [70:49]
Nicholas James Huber
Yeah. So that's been, it's been, I've ridden the J curve and there's, there are, there are, there are months of euphoria when you crush, you know, you. We had a 40 growth month, growth month recently and we're all feeling like we're on top of the world. And then there's the liberation day where you're like, gosh, keeps you up at night. So it's just the, you know, normal passive ownership of a business.
- [71:13]
Nick Huber
Nick. By the way. So with these, with this devastating SEO collapse and Twitter algorithm change that caused your reach to collapse, how did you recover from that? So how have you gotten leads back up and actually had a stronger Q1 than a year ago?
- [71:29]
Nicholas James Huber
We've had a. We have drastically improved the customer experience drastically. We present better candidates faster than anybody in the business. Our repeat business went from 1.2 placements on average to 3 placements on average. So our clients are coming back for more and more and more talent. And then we do some referral stuff to bring in new business. But we have yet to figure out like a real paid growth channel for this. I think it's outside sales and inside sales that really separate these companies apart. That's why we're super, super tuned into our close percentages by cohort. And I'm watching every single salesperson and I'm watching our sales close rates go up, you know, frankly. So, yeah, it's, it's working every part of the funnel from lead, where it comes from to how many of them book a meeting, how many of them engage for search, how many of them actually hire and pay us all the way through? So, yeah, it's, it's. I'm learning a lot about operating.
- [72:32]
Nick Huber
Yeah, well, it's, it's one of these where the pain of a crisis forces you to strengthen the organization. So this is all you're emerging as a, As a, you know, a much better organization. Better sales motion, tighter funnel, better upselling, better, you know, retention of existing customers and expansion of that revenue. All stuff that, that would have been sound to target anyway, but you were just kind of forced to prioritize.
- [72:58]
Nicholas James Huber
None of my recruiters, none of my recruiters were on variable compensation. Now they're on. Over half of their compensation is variable. Their best recruiters are making very good money. Same with sales. There's no variable compensation. There was no sourcing efforts to run ads and do LinkedIn outreach and find referrals for CL for, for the best candidates that have jobs. So, yeah, it's, it's a, it's just improving every little part of the company that over time shows itself. But the first year, those things take time.
- [73:28]
Marshall Haas
Walk me through where your executive team is located. Are they remote? I presume so.
- [73:34]
Nicholas James Huber
Head of finance is in Joburg. Head of revenue operations is in Joburg. Head of Sales is in Joburg. Head of recruiting ops is in Cape Town. Head of Sourcing is in Manila. So, yeah, it's, it's. The leaders of the company are in South Africa. I'm learning a lot about building executive teams worldwide as well.
- [74:01]
Marshall Haas
And on our pre call, you said something about a major workforce coming from South Africa every tax season to the United States to do Fortune 500 taxes. Can you remind me what you had said about that?
- [74:12]
Nicholas James Huber
Yeah. Every year, 30,000 chartered accountants from South Africa fly to DC, New York, Philadelphia, and do corporate tax and audit work for Fortune 500 companies and price, Waterhouse, Deloitte and so on. So there's a massive finance culture and sales culture in South Africa. And so, yeah, when you, when they go back to Joburg, they don't want to hit the road for four months again and be away from their family. So they want to work remote for US businesses. And, you know, four grand a month puts you in the top 0.1% of earners in the whole country.
- [74:47]
Nick Huber
And Joburg is really the financial capital of the continent, is it not?
- [74:52]
Nicholas James Huber
Oh, yeah, it's just like London, just like New York City. As far as the work culture there, there's. There's some massive issues in South Africa with the government, the corruption. They raised billions of tax dollars to rebuild the power grid and the politicians stole all the money. So the power grid does not function like in the, in the hot season, it's winter now, but in the summer, there's load shedding in every major city for four or six hours a day with no electricity and no ac. Yeah, they're living in South Africa with no electricity, which is a basic, basic, fundamental thing. Those are issues you don't run into. Even with all the corruption in Mexico and some other places, you don't run into that the utilities are sound in Bogota, in Sao Paulo, Brazil, in Rio de Janeiro, in Mexico City. So yeah, there's. But. So people do those things themselves. Like the high earners in South Africa have their own power. You know, it's. It their own security.
- [75:49]
Nick Huber
So they're working from home largely, which. With their own generators.
- [75:53]
Nicholas James Huber
Yeah, they have their own office outside of their house. Like again, four, four or $5,000 a month in South Africa is $200,000 a year in the United States. So they, they have large homes with separated offices and their own, their own power. You know, they have to do their own power because the government doesn't solve that for them.
- [76:13]
Nick Huber
And Nick, what of the time zone difference? So we all understand that that's complicated in the Philippines. Anybody who's worked with somebody over there has to deal with that. Sometimes you can have people work Philippine nights our daytime. There's a debate whether or not that's effective but when we're talking about management, your actual man at your executive team being on a different time zone, how do you deal with that?
- [76:36]
Nicholas James Huber
Yeah, so 5 o' clock Eastern Time is 11pm in Joburg. So it's not. They don't have to live, they don't have to live a different life, if that makes sense. Your Filipino talent, your India talent, your Sri Lankan talent, your Pakistani talent, they have to live a different lifestyle to work for a US business. 20 million people in the Philippines do 20 million people in the Philippines and it's almost all the high earners do in the Philippines. Frankly, I love, love, love Latin America. If you don't need the professional maturity to deal with bankers, clients, customer, you know, sales, high end sales. If you don't need the professional maturity and the smooth British accent hire in Latin America, just do it because they're on the same time zone. For 480 bucks we can get our team in Bogota, Columbia to Atlanta, Georgia for an, for an outing in person. It's six hour flight from Bogota. Mexico City is even shorter. So yeah it's, there's massive advantages to Latin America but sales and finance, sales and finance. South Africa is the hub and executive.
- [77:41]
Nick Huber
Nick, one of the ways that you were able to raise the money that you did is both all the way back in that first real estate deal, but also with somewhere is that your LPs, your investors know you so in some cases they're related to you. But but in other cases that you talked about, that broker in the real estate deal watched you go through the zoning and the permitting. Yours truly and 399,000 other people have watched you on Twitter. How you think so so people have invested in you because they believe in you. Because they've gotten to know you either at a distance or up close. Say more about media in your career.
- [78:27]
Nicholas James Huber
Twitter is a wonderful tool because it gives people a look into your mind. They see how you react to hate. They see how you react to people acting crazy and saying crazy things. They see how you argue. They see what your family values are. They see it's a look in your mind like when I tweet, when I type, it is coming straight from my mind to hundreds of thousands of people, which is a crazy thing to think about. But I feel like I know people who I follow on Twitter. I don't know, I know them on a deeper level. I know a lot of it can be fake. A lot of it's not the same when you're in the room with somebody in battle, operating a company or going through a tough investment or economic downturn or whatever, the stresses of life. Right. But it gave us a good strong foundation so that when I hopped on a plane and went, went to somebody's office and chatted with them about my business and how I think about things, there was a lot of barriers that were broken down previously that allowed me to accomplish more.
- [79:29]
Nick Huber
I heard you say the word hate. So I want to press. Press you on actually something that I'm experiencing right now, Nick, which is your Twitter Persona or shouldn't. I couldn't, shouldn't call it a Persona, but how you are on Twitter because it is you. But it does feel at times more aggressive. It has been controversial. You've gotten hate. And I want to hear how you responded, how you emotionally dealt with that. But the question but I'm experiencing you is frankly much more warm and cuddly than you come off as on Twitter. So it does feel like there was a little bit of marketing sell or positioning yourself on Twitter. Some people would say, you know, those, the aggressive tweets just travel better. So it was just widening that funnel. Talk to us a little bit about that. But then I really do want to hear how you deal with huge amounts of people saying unkind things. But first, first the how you. Your strategy on Twitter.
- [80:30]
Nicholas James Huber
Yeah, I think the Twitter is a place where nuance does not help anybody. Just. I'll just be honest. Nuance doesn't make people think, doesn't spark conversation. It doesn't have. There's no reason to read or engage with somebody who has nuance. So I have strong opinions that are loosely held. I'm not afraid to speak them. I'm not afraid to change my mind in public. And I'm also not afraid to goof off and say ridiculous things that in my opinion only anger the people who have nothing better to do than get angry. So I don't really care. But yeah, I'm. I'm a pick. I'm naturally. I have a weird sense of humor. I. A lot of it is for fun. But yeah, it's. If we transition to the hate, I guess the. It can get really tough and really brutal. Like I was under a full on attack from a anonymous account for three months last summer that took an insane emotional toll on me and even my family. So yeah, it's not for everybody. Like if you want to be worth following on X or on Twitter or anywhere, you have to bring a new perspective and you have to be able to put. You have to be Willing to put yourself out there, you have to be willing to look foolish. If you're super insecure about everything you send, you'll never type and send anything on the Internet. On one side of that coin is massive career advancement and opportunities to get in rooms that you never thought you would get in. Like being here sitting with you, talking to a bunch of, you know, your audiences and insanely driven and just getting in these rooms. It would never happen without it. On the other hand, the, the hate and the harassment and attacks are just part of what you have to live with if you, if you play this game.
- [82:15]
Nick Huber
And, and for people who aspire to build some sort of media something and even maybe get quite big one day and have to deal with hate, for lack of a better word, is there a way that you can tell them to accelerate how you've come to accept it? Because I assume the answer is, and I'm sure celebrities proper, you know, Hollywood style celebrities also deal with it and you just build a thicker skin. And that's the answer. There is no, there is no hack. It's just building a thicker skin.
- [82:46]
Nicholas James Huber
It's the Andrew Huberman PR approach. What is, what is that? When Andrew Huberman had all that crazy stuff come out about him, he didn't say anything for four months and then everybody forgot about it. That's the best way to handle any situation. If you let yourself get worked up, if you jab back, if you let yourself emotionally get worked up. And this is such a lesson for actual business ownership. If you let your temper and your emotions get the best of you, only negative things can happen. Only negative things. So yeah, you look at the best basketball players in the world, 90% of the feedback they get online is hate. Every politician, all they get is hate. Look at their ex, all they get is hate. Same with movie stars, celebrities of any kind, business owners that are really big deal. Anything along those lines, 90% of the feedback is always going to be hate because people, the negative people are the loudest and they're the ones who sit and thrive in these environments of anonymous, of anonymous situations. So yeah, it's just part of. But yeah, the answer is you have to develop thick skin. But man, it hurts. It hurts.
- [83:52]
Nick Huber
Yeah, the change in the Twitter algorithm. So here you are with 400,000 hard won followers and now just the value has really collapsed in that. Is there a platform or media play of choice today that you'd prescribe to people?
- [84:11]
Nicholas James Huber
I still think that some of the, some amazing life impact happened when I had 500 followers and 3,000 followers and 10,000 followers. So I would encourage dealmakers, business owners, to go in and talk about the deals they're doing in the business that they're doing. The problem is, is that the vast, the vast majority of people want to build an audience before they actually do something. And if you have no value to add anybody, it's, you're wasting your time. But if you want to get a following and you want to expand your network of high performing people, 1500 followers can change your life if you're a deal maker and you're in the right rooms and the right people are following you. So I still encourage folks to tweet, but don't expect or want to get to 400,000 followers. I get 1500 new followers a month now. I used to get that in 10, 12 hours back in 2021. The difference, it's very, very, very hard to grow on social media today unless you're willing to do short form video on Instagram and have a cameraman follow you around all day. It's very, very hard. So I'm at a crossroads in my life. I still have a media team. We can talk about the makeup of that media team, how I invest in it, But I'm at a crossroads now of, hey, am I going to be, am I going to try to do both at a very high level, meaning operate companies and media? I'm going to try to do both at a very high level. There's people who do it, Alex Hermosi, others. Or am I going to focus on media, double down on that, or am I going to focus on business and double down on that? I'm not great at short form video. I'm not, I don't want to have a cameraman follow me around. So therefore I'm at a crossroads of, hey, do I, do I double down and keep investing massive amounts of money and time into media or do I just keep doing what I'm doing with the right audience and focus on building companies? So it's, it's a tough, it's a tough dichotomy. But yeah, it's not, it's not easy to grow a massive following. And frankly, the massive following is not as valuable today as it was.
- [86:04]
Nick Huber
Well, when I think about a Hormozi or, or a Cody Sanchez who's, who's maybe closer, closer to me and maybe closer to you as well in terms of audience, I'm sure they would say I built this massive audience because it opens doors, because of the business opportunities that come from It. But maybe they wouldn't because I do suspect that at some point both of them not to pick on them, but they're Are motivated by. By the draw being known people that.
- [86:35]
Will Smith
It'S an end in and of itself.
- [86:36]
Nick Huber
To basically be Internet famous.
- [86:38]
Nicholas James Huber
And I would lie if I didn't say that I had an ego as well and care what people say on the Internet and how many people follow me and how many people buy my book. It's human nature for sure.
- [86:46]
Nick Huber
Yeah. Yeah. And then this experience with the algorithm, how does it make you think about your list? I'm sure you have a big email list and in podcasts where you actually you started in podcasting. So those two platforms are of course the pla. Are the algorithm independent, totally quote, quote, unquote owned audience platforms, if you want to call them flower media or technologies. So do you.
- [87:12]
Nicholas James Huber
Did.
- [87:12]
Nick Huber
Did it kind of cause you to refocus on those or. Not necessarily.
- [87:16]
Nicholas James Huber
Um, I definitely focus on those. They're important for me. But it's really interesting. People get go in phases and I'm sure you. You experience this as a creator as well. People get very into your podcast and listen to every episode for six months and then maybe they go back to it every now and then. But only a small few stick with you and me for years and years listening to what we do. So I'm on a. I'm on a float in a parade and I have a moving audience at all given times. And my email newsletter ages out. People get tired of Nick Huber and what Nick Huber says, period. People go through phases of listening to her mosey. They go through phases of listening to Cody, me, you guys. So if you're not always building your list, your list gets more and less and less valuable over time too. It's all a rat race and a treadmill.
- [88:05]
Nick Huber
Oh, it's bleak. But it's such a good insight. It is such a good insight.
- [88:09]
Nicholas James Huber
So I think the. The connections that you make and the true fans and I do feel some new energy around my book and stuff like that too. But it's not a great time to be a creator online.
- [88:19]
Nick Huber
One of the things, and this is borrowing from tech land and practices from over there is in fact your buddy Sean Puri says this a lot, that the distribution like, I like that it's all about distribution. And it's almost like I'd rather invest in an entrepreneur or a thing that has distribution unlocked versus how good the idea is itself or the entrepreneur is him or herself. So you had this incredible Incredible distribution, putting words in your mouth. Correct me but you started with this playbook. You launched all these businesses with the idea that you could just, you know, direct your, your audience to them and, and they, you know, you were, you were going to be the one man funnel for 10 different businesses is I, I don't say that to mock you because on its face it seems like a very sound strategy but some of those businesses haven't panned out at all. So react to. Just because you have this incredible audience doesn't mean that you can just launch any business to it and the business works.
- [89:25]
Nicholas James Huber
No, business is very hard. Business is hard for everybody. Making money's hard. I, I firmly and strongly believe that. And even with a lot of distribution, you can fail at business for sure. For sure. So I think I'm good at what I do. I have natural confidence. I have an ego. I have, you know, the, the courage to take risks. But also business will humble you and humiliate you certain days, you know. So yeah, like everybody wants to own a holding company is another thing. It's like the sexy thing to do now because of right because of Brent and Cody does it, you know I do it. Gurdley does it. Hermosi does it. A lot of people own holding companies. Sierra and Xavier with enduring so it's the sexy thing is in nine out of ten and I, and I'm about to speak out of two ties, two sides of my mouth. This just goes the nuance of business. I'm very lucky that in 2015 I got distracted and built that first self storage facility. I'm very lucky I said yes to Marshall to get involved in somewhere.com. very lucky I started recost. So those three businesses changed my life. If I was solely focused on one business I never would have done that. I'd still be moving boxes and stressed out during the storage season making a half million dollars a year max. But on the other hand, on the other side of it, the wealthiest people that I know, nine out of ten of them started one thing and did one thing really well. It's just truth. It's the truth. So how do you, how do you balance that in your head as an entrepreneur? I don't know but Yeah. I started 11 companies. Web development agency, a sales consulting agency, a pay per click digital marketing firm, an insurance company, a US based recruiting business, the US based recruiting business, the sales coaching business and the web development agency are shut down. Three of them are shut down. The middle five are doing well and they are, they have potential and Then the three monsters emerged. It was a power. It was a power law in what, what emerged from the efforts that I had to start these new businesses.
- [91:39]
Nick Huber
And if you had to pinpoint why District having incredible distribution didn't just make it work, what was it? Just you underestimated the operations and all the other things that make a business a success. Basically. It's not just about filling the funnel.
- [91:55]
Nicholas James Huber
Yeah. Like, yeah, it's, it's operationally difficult to run a business that starts to grow. It's operationally hard to hire great management that cares and compensate them in a way that keeps them motivated. And at your company, a lot of good decisions have to be made to build a big, good, sustainable business. So yeah, it's, it's difficult.
- [92:15]
Nick Huber
One more question. On the media stuff, Nick, you are talking about, or at this point where you're wondering whether or not you double down on media and go big or not, I gather you have a media team now.
- [92:30]
Nicholas James Huber
It's interesting because my media team is kind of morphing into operators that parachute into companies to work on certain things. Like my, my head of content is Colin. He lives in New York City, very well paid. He manages my full media team. He schedules my tweets, he schedules my Instagram post, He schedules my LinkedIn, he writes, he, he helps me form my newsletter from content that I've written. He edits his team, edits my podcasts. I have two podcasts that are released every single week. So a ton of work goes into that. Colin leads the team. He's the CEO or the head of media for me. He has six people on his team, two executive assistants, a video audio, a graphic designer and a web developer. Interesting thing is, is that Colin is playing head of growth, head of marketing at somewhere right now for this month. And our web developer is full time on somewhere too right now. And then Colin will parachute into Re Cost Seg and talk to the marketing team over there and we'll implement a lot of the things that are working at somewhere into Re Cost Seg and we'll go over to Bolt Storage. And so my media team is almost morphing into an operations team to enable my businesses while also running my media stuff. So yeah, I, I probably, if you count colin plus my six employees, I'm investing 350 to $400,000 a year in payroll for my media company.
- [93:50]
Nick Huber
Wow. Yeah, you better decide what you're going to do with that.
- [93:55]
Nicholas James Huber
It's still very worth it at this point. Still very like, I, I'm still able to drive A lot of leads to my businesses.
- [94:03]
Marshall Haas
So what does your portfolio of media products look like? You ran us through them there. But what do you post specifically? How much. It seems like it's extremely dynamic how you treat media and what works and what doesn't.
- [94:17]
Nicholas James Huber
Yeah, I think half, half of what you see on Twitter is me in real time tweeting. The other half is scheduled posts from my team from past things that again, media is a parade. So the audience is new all the time. So I have to repeat, I have to repeat and replay the bangers. Or it's not, it's. Those are going to just disappear because people are going to forget them. So we repost it on Twitter, LinkedIn, Instagram, Threads, Facebook. And then I run a newsletter that goes out every Monday that's deeper, deeper, more intimate about operating companies, sales, email hiring. That's an email that goes out every Monday. Then I have two podcasts. The Nick Huber show, which is real estate, the Sweaty Startup, which is small business. And yeah, then the book is a big, is a big endeavor that my team has kind of released and launched. So.
- [95:07]
Marshall Haas
And how many posts do you do? Is there an upper limit to how much you should be posting? Because Alex from OSI effectively says the more the better.
- [95:15]
Nicholas James Huber
I look at it as I only have so much attention that's going to come my way. So every post is a bullet that I'm using in my gun that day and I have five or six bullets to shoot in a given day. That's how I look at X.
- [95:28]
Nick Huber
And so Nick, with your team, with your team of Colin plus six, you said 350 to 400 a year, so that's what, $30,000 plus a month. How many hours a week are you personally devoted to or creating media?
- [95:47]
Nicholas James Huber
Well, the book launch has been intense. I've done 70 of these one hour interviews. So over two months, that's, you know, what, 10 hour, six hours a week of the. This. I took a lot of time to actually write the book, you know, thousand hours over two years. So yeah, it's been. But then this week, outside of this interview, I'm, you know, really deep in somewhere, like gonna put 40 plus hours into somewhere this week. So yeah, it's. It varies.
- [96:20]
Nick Huber
Okay, but maybe outside of launching a book, writing and launching a book, could you give us a rough estimate of.
- [96:27]
Nicholas James Huber
How many hours, three hours a week of productive media stuff and then probably another three hours a week of just wasting time on X.
- [96:36]
Nick Huber
Okay.
- [96:37]
Marshall Haas
Oh, that's not bad at all. I think most people waste three Hours a day on X, just normally consuming stuff.
- [96:43]
Nicholas James Huber
I have 30 minutes a day that, before it shuts off on my phone, and then I probably spend another, you know, 15 minutes on my computer on X2. So.
- [96:51]
Marshall Haas
Yeah, no, very cool. You know, I knew I would enjoy this conversation ever since I learned your full name was Nicholas James Huber.
- [97:00]
Nicholas James Huber
We do have something in common there.
- [97:02]
Marshall Haas
Listening to what you're telling us, two pieces of a secret sauce emerged to me. One is the media presence that you're investing heavily in, and it's giving you access to investors, opportunities, deal flow, clients. And then the other secret sauce that really intrigued me was you talking about remote work and how you have built a competitive advantage with your companies hiring abroad where you can get not only cheaper talent, but talent that is available around the clock and are specialized in a way that enhances quality for your company. So looking at these two secret sauces, and maybe you have more, but what does the future look like for a serial entrepreneur like you?
- [97:48]
Nicholas James Huber
Yeah, I think I, I'm super ambitious and, and overly confident, and I've written a lot of checks in the last couple of years, and now I got to go cash them. I, I raised a bunch of money in my storage portfolio. It's been chaos the last three years in storage. We refinanced all of our properties without any cash in from investors, which is more than 80, 90% of real estate. GPS can say. I'm very proud of that. I'm very proud of our operation there. But I bought a big business, and now I got to do with that business what I, what I told my investors I was going to do with that business. So I am singularly focused on, you know, growing these three companies. Ari Costa, Bolt Storage and Somewhere dot com. So I'm at, I'm at a phase. I'm, I'm, I'm a firm believer in, like, seasons in the life of an entrepreneur. Like, you'll have a season where you don't work that hard, things are going great, you're making good money, and you'll have a season where it's time to throw down and, and do what you need to do. I'm in a season right now where I need, I need to throw down and do what I need to do. If it goes well, it'll amplify everything, and I'm super excited about that. If it goes poorly, at least I'll say, At least I'll get to say that I took the shot, and I won't be. I won't regret it. But Yeah, I feel a lot of pressure from the investors that are trusting me. I feel like I have a lot to learn but I'm also operating with confidence. So it's a very fun and exciting time. But it's definitely a high pressure, high stress season in my life and I'm kind of looking forward to not, not as much stress and pressure.
- [99:27]
Marshall Haas
But you've talked about how there have been multiple trajectories in your career and starting your own company. A moving company early on was one and then getting into Self storage was the second one and then buying a minority stake in Summer.com was a, was a third one. You know what, and I under totally understand as an entrepreneur that you're in a season and you, you gotta kind of dig your head in for a while being now. But what, what are the next trajectories when you have the kind of defensible moat that you have built already and capabilities that you have and the network that you built. What does that look like if you take a really long term view?
- [100:02]
Nicholas James Huber
Yeah, I have some very ambitious goals of what I want to do. I love nurturing talent and building companies. I'm excited to do more of that in the future. I would love to buy more companies in the future. I would love to write more books in the future. I, I'm very motivated by money and what you can do with it from a philanthropy standpoint and a, and a generational wealth standpoint. So I'm super excited about the chance, the odds of me succeeding and making somewhere massive and making re cost seg massive and making Bolt Storage massive. So yeah, the, if things go well, the story that I'm writing right now as we speak in the background that nobody knows about will be epic. But, and I'll be proud of it. But if it goes poorly, the interesting thing about like just being a man and being an entrepreneur, you really tie yourself to these, to these things. I know some women do that too. But mainly as a man you like, you have a lot of self worth tied up in your business and what you do and how much money you make and how much success you have on the scoreboard, that is cash money. So if it goes poorly I'll have to, I'll have to reset and you know, I'll be broken for a little while but I'm going to bounce back. So I think, I think the odds that it goes very poorly are low, are low but there's always a chance like operating companies is a different thing. So I'm excited about the upside of these businesses that I'm running. But it's hard and it's fun and it's exciting and it's challenging. I'm learning a lot. I'm getting humbled, but I'm also getting more confident. It's. It's a crazy, crazy time. So I'm super excited, but I have no idea, I have no idea what the future is going to hold. I like to think that someday somewhere is doing, you know, $250 million a year of revenue. But we had a lot of work to do to get there.
- [101:50]
Marshall Haas
You're influential, accomplished and opinionated. Do you think at one point you might get engaged in politics?
- [101:57]
Nicholas James Huber
No. No way. No way. I will build organizations and I think with that will come influence, but I don't think there's anything just selfishly. There's nothing less rewarding or worse for your family than getting into politics.
- [102:11]
Marshall Haas
Yeah, it's a zero sum game.
- [102:13]
Nicholas James Huber
I'm really thankful that some people do it. I think a lot of people in that business have a good heart and do it for good reasons. But. And it's really a. I can't think of much good that would come from it. From a relationship and family standpoint. I'm really excited about my kids right now. My seven year old is amazing. My, my five year old, I mean, they're so amazing. I'm so glad I made the sacrifice earlier in my career to have kids. I had my first kid at 27. So glad I didn't wait because I'm just enjoying that so much today as well.
- [102:42]
Nick Huber
Well, that's one of your. That's one of your. It's not controversial, but strong takes that some people, that lands on, some people controversially have kids early. None of this being single until you're 40, as I did, Nick Huber stuff.
- [103:00]
Nicholas James Huber
There's, there's obviously, there's obviously a lot of nuance to so much in life. And of course Twitter, my Twitter is, you know, I hope people can look at it and realize that it just, it is what it is as a, as a broad message. But life's hard, man. Life's hard. So there's a lot going on.
- [103:16]
Nick Huber
Yeah. Well, this has been an absolute blast, Nick. I was so thrilled that we were going to have this chance to, to talk to you about this very wide ranging set of topics. You've been such a good sport. So transparent, especially unpacking that deal. We love transparency on deals. You gave it to us and then some. So we really, we really thank you for coming on the minds Capital Podcast and Acquiring minds Nick Huber somewhere.com name of the book.
- [103:44]
Nicholas James Huber
Yeah, so if, look, I'm very accessible, you can email me. Nick sweatystartup.com I read every email if you want to discount it. Somewhere you want to pick my brain about anything. But yeah, the Sweaty Startup is the name of the book. I think it'll add some value if you pick it up. So no, but look, look guys, I really appreciate your you giving me this microphone. Love what you're working on and just thanks for having me.
- [104:04]
Nick Huber
Thank you Nick.
- [104:05]
Will Smith
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