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- [00:00]
Will Smith
Change management is one of the delicate dances that acquisition entrepreneurs perform when they take ownership of a business. The conventional wisdom is that too many changes too fast can overwhelm the team and processes you inherited, leading to resistance, attrition, unintended consequences. Well, today's guest took a different approach. To me, the most striking feature of today's story is the comfort that Sean Daly feels making changes fast and forcefully. Sean has been around the block a time or two, so he's simply more confident in his own leadership, but he also brings a spirit of experimentation and iteration from his years in startup land. Yes, mistakes will be made, goes the philosophy, but we will absorb them, adapt, and move faster toward the improvements that do work. Now, this is nothing new. You'll hear me cite the Zuckerbergism move fast and break things. But it is quite rare in our world of acquisition entrepreneurship, where a light touch, at least early in a transition, is the prescribed approach. One other thing to call out Sean exited a previous startup, so he had resources and was able to buy his H Vac business with all cash, which means there's no SBA loan burdening his cash flow. So this is really more of a growth equity approach versus the leveraged buyout model so common in our world. With an LBO model, there is a big debt payment to make every month and you naturally worry about making it, but that may make you more conservative. Your first priority is paying down the debt, not growth. With no debt payment looming over the business, growth moves to the front of the line. Now the flip side is that for Shawn to get a good return on his equity and a return appropriate to the high risk of this investment, he needs to grow for the SBA loan buyer, as long as they don't screw up the business and it keeps performing as it did historically, it will be a very good investment. Now all of this is going to be moot for most listeners who have no choice but to use debt to acquire their business, but it is a contrast worth paying attention to, and you will sense the difference in today's interview with Sean Daly, owner of Icy Cool Mechanical of Coral Springs, Florida. Here he is, and if you have a question as you listen to his interview, we're excited to introduce a cool new feature on acquiring minds live Q&As with our guests so that you can come meet them virtually and ask your questions directly in a Zoom call. Sean's live Q&A is Tuesday, March 18th. Register for that at the link in today's show notes or in the YouTube notes. If you're watching on YouTube or at acquiring minds co. So come to Sean's Live Q&A on Tuesday, March 18th. Register at the link in the Notes Announcements Next Thursday Legal Office Hours this one on employee issues and non competes. Attorneys Bill Barlow and James David Williams return to cover all the employment, non compete and non solicit issues that commonly come up on deals. That's next Thursday, March 13th at noon Eastern. Register at the link in today's show Notes or on the Acquiring Minds homepage. Acquiringminds Co. Also SM Bash is coming up Quick first week in April now you know Bash as a conference uniting small business buyers, operators and investors. Speaking of, I'm told there will be quite a few investors in attendance this year. It is in Dallas April 2nd through 4th. Many acquiring minds guests will be there both in attendance and on stage. Get your tickets now@smbash.com and finally, in case you missed it, my partners in Mind's Capital and I have launched a podcast called Meeting of the Minds. It's a weekly show focused on independent sponsors. As you know, the independent sponsor format of buying businesses is quite different than that of search larger businesses, much more outside capital, strict expectation of an exit by investors. But for some searchers, it's where their business buying careers might take them. Last week's interview was with Azar Quaider who bought an 850 unit hair salon chain during COVID and turned it around to spectacular success. So as you can see, not exactly a self funded search story, but tons to learn from nonetheless. The podcast is Meeting of the minds. It's on YouTube, Spotify, Apple every Wednesday. Please join us. Foreign 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. If you ask owners in the ETA and search community which insurance broker provides highest quality work, great outcomes and has a practice dedicated to searchers and acquisition entrepreneurs, One name comes up again and again. Oberle. Oberle Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by a two time successful searcher, August Felker, which makes Oberle a specialty insurance brokerage for searchers by a former searcher and if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way to get to know August and the team at Oberle to take advantage. Check out oberle-risk.com that's o b e r l e-risk.com link in the notes. Sean Daly, welcome to Acquiring Minds.
- [06:34]
Sean Daly
Pleasure to be with you.
- [06:35]
Will Smith
Will Sean, you come to entrepreneurship through acquisition by way of zero to one entrepreneurship and you imported a lot of that zero to one style into your approach to buying a business. I'm talking about experimentation, I'm talking about velocity. So let's begin Sean, with the backstory there. Give us a quick background on your 0 to 1 years and how they led to your desire to buy a business.
- [07:06]
Sean Daly
Yeah, absolutely. So I'm a Miami guy. I was born and raised in Miami. One of the six of us and probably a couple more but nonetheless very few from Miami. I went to school in, in Philly and made my way up to New York. I got into tech right away out of college. I sort of fell in love with tech and, and a couple years in I, I kind of joke that I sort of wandered onto a rocket ship. There was a company called Glia Technologies at the time it was called Sail Move. I was the first business development hire there and you know it was, it's typical startup story and, and then the company really started to take off. We sold software to the insurance sector and it actually did quite well and I was there for four, four great years and then I moved down to Miami. Glia went on to be a unicorn and billion dollar plus valuation and so I really got to see, you know, what it was like to start from ground zero and make something work and all the chaos that comes with it. And then I moved down to Miami. I started looking at the ETA space but I ended up joining a venture studio to do 0 to 1 again. And I got, I built a business in the title insurance space, a tech driven title company called Expatitle. And, and, and I didn't end up proceeding with the ETA model at the time because you know, at that time it was very much traditional search or nothing. I spoke to a lot of people and I didn't have an MBA and, and I don't know if I'd necessarily be good MBA material anyway and, and so I ended up doing the venture studio model and growing that business.
- [09:14]
Will Smith
This was mid teens now Sean.
- [09:16]
Sean Daly
Yeah, this is like 2016 to 2018. I looked at it a little bit but then, but then moved to Miami and started and started Expetidal. Built that business over a few years. We weren't looking to sell our business. We had just raised money, ven venture money six months earlier. But we ended up exiting from that and, and I joined Real Brokerage to, to lead their title insurance sector for, for two years and then left that at the beginning of last year to go into ETA and I bought a business in July of last year.
- [09:58]
Will Smith
So a couple follow ups. You said you then worked at Real Brokerage, so you exited to a public.
- [10:03]
Sean Daly
Who.
- [10:03]
Will Smith
What is Real Brokerage? For people who don't know the consumer real estate world, it's a big name. Tell us about that or just tell us what it is.
- [10:11]
Sean Daly
Real Brokerage is a tech powered real estate brokerage. They have 25,000 real estate agents across the US and North America. They bought my business in January 22nd to be the dedicated title insurance provider to the business we were providing at the time. Title insurance services to three states, Florida, Georgia, Texas and over two years we expanded to about 14 states. So it was a wild ride for sure.
- [10:41]
Will Smith
Great. And, and so real, Real Brokerage is a public company.
- [10:46]
Sean Daly
That's correct.
- [10:47]
Will Smith
So phenomenal. So you, you built a business from scratch and exited to a publicly traded company. I mean that is quite a feather in your cap. How was, how was the liquidity event if I may ask? You're, you're still working, so maybe it wasn't hundreds of millions.
- [11:03]
Sean Daly
No, I mean, listen, it was a, it was a successful exit. Everybody. We worked out for all the parties involved and you know, I like to think that I did very, very well by my investors and you know, the company is still growing today. We're providing successful roles and people are growing in those roles and I get to sort of follow along with the things that they're doing and it was, it was, it was satisfying. And you know, looking back, you know, it all worked out for everybody.
- [11:39]
Will Smith
Great. And congratulations again on that Sean. And we're of course I'm going to ask you why ETA when you're having so much. You seem to be thriving in zero to one land. But just real quick going back to Glia. So shortly after college you end up at Glia. So this is, this is in your 20s that you're on this rocket ship.
- [12:01]
Sean Daly
I was, I, I started, I mean I went to a couple, I mean my first job out of college, I was making 200 phone calls a day for software companies out of a contact center in Philadelphia. And I was very, very good at it. And I ended up flying through the ranks. That was my first job out of college. Did quite well there and then I was involved with a couple of the software company. That's really when I fell in love with tech and technology and really like early stage and Then, and then I did some consulting work in New York and then one of my clients, quote unquote clients, I was just sales consulting, but then I ended up joining with, with the guys from, from Galia, so.
- [12:42]
Will Smith
And you were in your late 20s by that?
- [12:44]
Sean Daly
I was, I was, I was 28 by then.
- [12:48]
Will Smith
Okay. Reason I'm asking is because I just happened upon a Twitter thread day or two ago where the author says something to the effect of if you're an ambitious entrepreneurial type, the best way to spend the first stage of your career is finding a rocket ship in your 20s and, and being there for four or five years and watching a business go from low double digits employees to high double digits to into the hundreds and beyond, and you can pack 15 years of career business experience into three. Sounds like something, something akin to your glia experience.
- [13:39]
Sean Daly
I think there's some truth to that. I mean you can, it's sort of like a fast forward in, in business. There is a running saying in the startup world which is, you know, if you're offered a seat on a rocket ship, just get on. Yeah.
- [13:52]
Will Smith
You know, by the way, that's, by the reference there is Carol. What's her name? Sandberg. At. What's Sandberg's name at Facebook. When she asked her, her mentor if she should join Facebook, that was his response. I think that's where that comes from.
- [14:08]
Sean Daly
Yeah. And I think that there's some truth.
- [14:11]
Will Smith
Cheryl Sandberg.
- [14:11]
Sean Daly
Cheryl Sandberg. There is some truth to that. I mean I think that it's, you get to see the, when you work in a high performance environment, you know, you're, you're forced to, and you see a business on fast forward, you see a lot of the things that you do are supposed to do correctly, but you also see a lot of things that you shouldn't do and all the mistakes. And I think that the, the big difference between the companies that are ultra successful and, and the ones that, you know, are, are, can still be successful, but the ones that grow super fast are the ones that make mistakes. But, but very, very quickly bounce back and how quickly they bounce back. And, and because everybody, I just believe that everybody makes the same mistakes at a certain rate, you know, and everybody follows a similar path, but it's about how quickly you can pick yourself up to, to keep, to keep going. And, and I think that when you are involved in a space, in a business like that or something that is growing very, very quickly, you see both ends of the spectrum.
- [15:21]
Will Smith
So then the other obvious question to ask here is why were you so tantalized by ETA when you seem to be thriving in zero to one land and indeed really love it? You know, you're, you, you got aboard a rocket ship, you did really well as an SDR, which is, you know, cold calling 200 companies a day, which is kind of the lowest, the lowest rung on the ladder in techland. To be a, you know, fresh out of college and trying to sell B2B software and then you do your own and exit to a public company. It just seems like you'd be a lifer. Why, why was the, why was the, why was ETA such a siren call?
- [16:05]
Sean Daly
I think that what I fell in love with was the idea of entrepreneurship. And it's a, it's a valid question. I don't, I don't think that they need to be mutually exclusive. I think that there's a reason why there's entrepreneurship in eta. I think that there's a pretty good definition around the word entrepreneurship because people can be entrepreneurial, right, and still work in a large company or a Fortune 500 company and be entrepreneurial. I think the purest definition of entrepreneurship that I've found is being able to proceed with a business or an idea without regard for current resources. And I think that that's a really, really good definition of entrepreneurship. There are different scales of that, right? There's, there's a more conservative approach to it, right, which is the eta. There's a more extreme version to it, which is starting from something on, on the back of a napkin and just sort of going for it. And so I, I think I fell in love with the idea of, of being entrepreneurial. Both my parents were entrepreneurs. My dad has had a successful software company in the late 90s. My mom had a marketing, very successful marketing company. My, my grandfather, although he was a, he was a successful attorney, built a very successful. The Performing arts center in Miami, which is entrepreneurial, right? So I think being around that and, and just sort of saying I'm going to do this without, with everybody telling me that it's a bad idea for whatever reason is I think what I enjoy, which is it sounds a little nuts. But, you know, I think that that's literally what why people do it is, is just because they're just going to do it anyway.
- [18:04]
Will Smith
An SBA loan broker, as opposed to a direct lender, doesn't work for a particular bank. Instead, the broker pairs you with the right SBA lender for your deal based on industry terms, risk thresholds, then helps you navigate the process better. Than many lenders themselves do. Matthias Smith of Pioneer Capital Advisory is just such a broker. Matthias worked at two of the country's top 10 SBA lenders. So he's been on the inside of the SBA process and knows well the pitfalls and hurdles and how to avoid them. He struck out on his own to laser focus on the ETA and search space. Our niche is his niche. You'll see Matthias at all the ETA conferences. He's closed over 30 search deals since starting Pioneer in May of 2022, including some acquiring minds guests. To learn more and get in touch, go to pioneer capitaladvisory.com or click the link in the notes. So after being on a rocket ship and doing your own 0 to 1 exiting to a public company, finally then you decide that it's the time to search. Is that because now you have a little bit of a balance sheet and you can buy something more easily.
- [19:22]
Sean Daly
Yeah, I mean when I, when I left real, I, I, I spoke to about, and this is not a joke, I, I really wanted to get an idea of the space. I spoke to about 200 people I, I, I spoke to should have a podcast. I, I, and that's actually a real statement. And I reached out to people that were doing traditional search, I spoke to people that funded traditional search. I blasted through search funder to really understand this space as much as possible. And when I came out I was like, okay, I'm going to do a traditional search because you know, I think people are more accepting of the non traditional mba. And as I sort of went down the path and started talking to more and more people and I, and I had a conversation with traditional search fund investors. I think I kind of learned that about this, this, this self funded search model and, and I sort of said to myself, well, you know, I think this could work. You know, I didn't know when I decided to pursue this path. Like I knew as little as anybody that does when they, when they start something. But I sort of figured out that I think traditional search was, was, was a good option. But I, I kind of went down the path of the self funded search and I felt that that would be better for me.
- [20:44]
Will Smith
Okay, so tell us about what your search looks like.
- [20:48]
Sean Daly
Yeah, being that I understand sales and outreach, I gave myself, and I had a conversation with, with my family, right with my, with my wife and sort of determined that I would give this a year, right. And, and a year of Runway to make it happen. And so considering that it was kind of like jumping off a cliff and Figuring it out on the way down and building a plane on the way down. I had to move very quickly, right. And so I even tried to squeeze that time frame into, into like a few months and see if I can make something happen in a few months. Because if I can make it happen in a few months, at least I'll learn through the next eight or so months. Ten. Eight to ten months. So very quickly I, I jump, you know, went into it, I hired a, an individual out of a girl out of Ukraine on upwork, and she helped me source deals. Cold outreach. So we emailed businesses primarily focused on home services. That's the space that I really, really know. Title insurance is home services. So I really wanted to stay in the home services sector and sort of follow that somewhat playbook. You know, home services. I joke that these businesses kind of tastes like chicken, right? They all like, it's kind of like software that they all operate in similar fashions. Right.
- [22:20]
Will Smith
So, and so although title insurance is basically insurance. Yeah. But it's not, that's very different than having a crew of H VAC technicians out in people's homes fixing the compressors.
- [22:33]
Sean Daly
But you're still providing a service through, through title insurance. You have to, you have to service the closing. So you still hire agents. It's probably a little more white, white collar, but nonetheless it's, it's. You have, you're hired to do a service. Okay. And, and so I, I focus primarily on home services. And when I think the velocity of it really helped me because number one, I, I spoke to a lot more businesses than, than a typical individual. Like, I have a good friend who was helping me through this process. He was in PE and he said no, typically in PE source probably 300, 400 deals a year. We went through about 300, 400 businesses in, in the first few months and, and really, really hit the ground running. And, and I think that all those conversations really helped me. Like when I had my first diligence call or my first call with a roofing company in Orlando, I didn't know what to ask. You know, like everybody just sort of goes in with the same, the same mentality, right. Or the same questions. And so, but I had so many conversations that I kind of like built a rhythm to it. And, and then I, I source a deal was a kitchen cabinet and.
- [23:56]
Will Smith
Wait, wait, Sean, let me stop you here. Let's, let's dig into this a little bit. So when you say you sourced 400 deals, which is more in a few months, which is more than A PE firm will do in a year. I mean, what, what do you mean by source them? Just like, like emails, emails sent to a business or actual responses or phone calls. What is, what's your, how many, let's put it this way, how many, how many businesses did you actually attempt to contact and then how many calls did you actually have? What was that ratio?
- [24:32]
Sean Daly
Oh, I sourced thousands of deals. Like we contacted thousands of businesses. I was, I mean, one of the conversations that I had when I was going into this space is that I thought was very wise from a, from a searcher. It was, he was an active searcher and he said that there are three levers. The first one is the location of the business, the second one is the size of the business, and then the third is the industry. And you have to pick two in order to be successful. Right. And so I, I was pretty flexible on, on, even on the location at a certain point because I, I've managed remote teams, so I felt like I could, I could manage it remotely. So that just allowed me to look at a lot more businesses because of the size and I just opened up the three levers rather than just two. And, and so, yeah, I mean, that's why we sourced thousands of thousands of businesses. I, I looked at with seriousness, probably about three to 400. And then conversations I probably had, I don't know, 50 plus conversations with, with, with companies. And then I sent out a few, Lois, and I won. I, 1 was very close to, but ended up not pulling the trigger. And, and then the, the, the business that I did land on that was in month four that I found it and then, and then went in quick, quickly into LOI and, and bought it about 45, 60 days later.
- [26:05]
Will Smith
I would say 50 calls is a pretty, you know, high impact cold outreach campaign. I hear usually quite negative things about cold, cold outreach. So I guess I'd like to understand how, you know, what your outreach machine looked like at the end after you, after it was kind of finely tuned and you'd had a chance to make mistakes and what it looked like at its peak. First question would be what was the messaging you used? I assume that evolved a lot. What was the final message you landed on?
- [26:40]
Sean Daly
We were still talking to brokers. Don't get me wrong, we were doing a mixture of reaching out to brokers, following up with brokers, and also direct campaigns to, to owners. And I think that we probably followed a similar trajectory to others in terms of conversion rates, but we were just doing it a lot. You know, we were doing A lot more and consistent about it. So we, every day it was, I was meeting with this girl and every morning we'd have a meeting and talk about the number of, of, you know, messages that we send out, the number of broker calls, the number of out everything we'd go through everything. It was, it was, I treated it like a, like I was running a team. Right. And so that consistency, I think gave us a good chance. We happened to source the deals that we had under LOI through brokers. But, but I wouldn't change what we did because I think it served multiple purposes. Number one, because it helped us look at more deals. But number two is because we just had a lot more conversations. And when you are looking at, when you, when you have enough conversations with, with an, with an industry, you can come into a phone call with an owner really understanding some of the nuances that they would expect you to. Right. So by the time I had spoken to Rick, the owner of, of IC Cool, I already had a lot of the questions that he would ask answered because I had already spoken to a bunch of H vac businesses. And so I think that, that, that, that is the, the second reason why. And I think that it's equally powerful.
- [28:22]
Will Smith
Yeah, the value in the, in the education. I mean, as you have these conversations, you're, you're really educating yourself on, on these industries. And was this woman in Ukraine working full time for you?
- [28:36]
Sean Daly
Yes.
- [28:37]
Will Smith
And you found her on upwork. Can you share how much that cost?
- [28:41]
Sean Daly
Yeah, so she was getting paid about $10 an hour. And, and you know, so it's not cheap, but if you look at it like you're running a business, the, the opportunity cost of me giving up one year versus two years of, you know, running a business, bringing in salary, etc, the decision was that it's better to hire somebody and to move faster than to not hire somebody, do it all myself. And then so it's more costly that way because if you're, if you're incorporating, opportunity cost. And so it, you know, at the end there, there was. I made the business decision to hire her and, and it ended up working because I found a company much faster than what people were saying I would find it, you know.
- [29:40]
Will Smith
Yeah. So $10 an hour comes out to what, 80 a day? 400, is that right? Yeah, 400 a week, 1600amonth. Something in that range.
- [29:50]
Sean Daly
Yeah, it was, it was, you know, probably, I mean, it was probably the equivalent of hir firm, but I figured that it would be better to control the entire thing myself. And you know, when you incorporate all of the list building efforts and all the time that they, that they have to, you know, write these emails and whatever, it'll probably come out to about the same as hiring a third party company. But I have a lot more control over. Yeah, over the messaging, over the things that we're, you know, we're doing.
- [30:21]
Will Smith
And was she experienced in cold outreach or did you kind of have to train her from scratch as to what this whole thing is about?
- [30:27]
Sean Daly
Yeah, she was definitely trained. Yeah. I wouldn't suggest hiring somebody that, that doesn't know what they're doing. You end up spending a lot more money because it's going to take a lot more of your time to train them. So I would rather spend more money on somebody that really knows what they're doing than having to spend a bunch of time training them. That's just, I don't know, that's the way I see it.
- [30:50]
Will Smith
I really want to underline this point, Sean, about the cost. So say it's $1,000, $1,600, $2,000 a month now that a lot of searchers are going to recoil at that cost. But, but it's really important to think about it, as you said, as a capital allocation. I heard you say that, heard you say opportunity cost. If you're gonna buy a business and it's gonna pay you a salary and it's gonna say that salary conservatively is a hundred grand a year. So what is that, 12,000? Eight. $8,000 a month?
- [31:21]
Sean Daly
8,500?
- [31:22]
Will Smith
Yeah, $8,500 a month. So for every month that goes by without a business, you are effectively losing the opportunity cost. There is $8,500 a month. So paying $1,000 a month to pull forward by many months, a salary of $8,500 a month is an enormous ROI. So, so people should just recognize that the opportunity cost of taking an every additional month not getting salary is really quite large compared to a thousand or two thousand dollars a month.
- [32:03]
Sean Daly
You know, it's, it's, it's, it's an interesting thing. But, but I do think that that goes into the idea of being entrepreneurial, right. Because entrepreneurs, they're kind of like looked at as risk takers. I, I, I like to think as really good entrepreneurs as risk reducers. And, and what I mean by that is that they are able to balance risk and reward really well. And so if, if, if they, they make really good decisions on, on business decisions. So I think that like, that goes into it as well. You're just going to make a decision based on, if you're gonna make it based purely on capital, it's, it's better to do it than not. That's the way I look at it.
- [32:44]
Will Smith
Yeah. And it worked just as it was supposed to. In your case, you found something pretty quickly. Yes. It ain't paying you 100 grand a year. We'll get there. Okay. So, and, and, and, and also, you know, we're kind of talking about this in this very abstract opportunity cost, capital allocation way. But in the pre call, you also just emphasized the posture of urgency, that there's also value in just feeling a sense of urgency. Tell, tell the audience what you told me.
- [33:19]
Sean Daly
Yeah, I mean, there's no motivation like some fire under your ass. Right. And so when you give yourself time frames, when you give yourself goals that are, you know, that are stringent and you'll kind of find a way to make it happen and you'll get creative as to how to make it happen. And so, you know, in those ca. In that case, I, I gave myself, you know, 60, 90 days to find a business when knowing I had a, a year. But if I, it's kind of like cleaning your room, you know, or cleaning your house. It's like, well, I have all day to clean my house. It'll take you all day to clean your house?
- [33:58]
Will Smith
Yeah.
- [34:00]
Sean Daly
In this case, if I, if I, if you tell yourself I have an hour, like you'll get it done in an hour. So I, I told myself I have couple months and lo and behold, I did find something in a couple months and, well, I guess a few months. But you know, in the scheme of things, it was, it was faster than, than, than others may have experienced or may experience.
- [34:21]
Will Smith
Great. John, okay. You were about to tell us about a deal that you found which was not the one you would, one you bought. Let's, I guess hear about that briefly, but then let's, let's get to the business you did buy.
- [34:34]
Sean Daly
Right. So I, I found a kitchen cabinet and, and installation business and they install kitchen cabinets and countertops. I like the business. They really didn't have any inventory, which was cool, and they had solid margins. There were some risks on it that were, that were like, you know, they got most of their business off of Google Ads, which is probably not a risk that people take too much into consideration. But you know, there it is a risk.
- [35:01]
Will Smith
Right?
- [35:01]
Sean Daly
Because if you have concentration, it's almost like concentration with your customers. Well, if you're concentrated a lot through Google, that's a Risk too. Didn't. Didn't love that. But. But nonetheless, you know, it was. It was. It was a flag to look at. But we got to the LOI and. And we started really looking into the business. But there was. There was something about the dynamic of the founders that I didn't. That I didn't like that I could. I could just feel like they were trying to sell the business because they were trying to get rid of each other. And that was not really a business that I wanted to walk into. And. And we decided to walk away from that one. And, you know, it was a. It was a much more sizable deal. That business was probably doing about 10 million in revenue. They had about a million and a half in ebitda. So it was a much more sizable deal. The multiple was reasonable. Everything looked good. You know, they had some things that. But that dynamic to me was not something that I wanted to be around and wanted to walk into, you know, and that was. It decided to move on.
- [36:11]
Will Smith
So you must have liked to. The seller of the deal that you did find. Tell us about it.
- [36:15]
Sean Daly
I think it was about two weeks later I set up a meeting in Coral Springs, Florida, which is about 45 minutes north of Miami, with a small H Vac business. I wasn't necessarily looking at a lot of H Vac business, although I had seen several of them. They seemed to fall off the market pretty quickly. And. And I got there in the morning and I met the. The broker, nice guy, met the founder, and I sort of hit it off with him. He is from the Dominican Republic and my wife is from the Dominican Republic. You know, he. The way we talked about family values and just the general way that he ran his business, I got good vibes from. And then I. I think from that he liked me and I liked him, and that. That was. That was a good sign. And then I went into LOI the next day. It was sort of like, okay, let's. Let's see what. What's all. What this is all about. Started looking at the b. The books. And the books looked, you know, solid enough. There was definitely a lot of room for improvement in terms of technology. They. And. And I would say all this to Rick personally. So he still works with us today, and they were still using punch cards, you know, to. To clock in and clock out, and literal punch cards. So I was like, okay, we can get rid of that. We can get rid of this, we can get rid of that, and. And we can save on the sort.
- [38:02]
Will Smith
Of thing we love to see. This is A. This is a fax machine, essentially.
- [38:06]
Sean Daly
Exactly. And they would write all of their. Like, literally write all of their jobs on a. On a whiteboard. And I was like, well, what happens if there's a job next Tuesday? You can't see it. So I think from a technology perspective, I was able to. I was. I felt like I could come in and really make a difference. I think that a lot of people as a CEO, when they come in, they kind of look at themselves as a head of finance. I said, I could probably come in and look at myself like a head of sales. Right. There was no dedicated sales team. I could build a sales team. There was no sales and marketing. I could implement a sales and marketing program. I felt that there was enough net income to be able to do so. And, and so I said with those dynamics, I, you know, it. It. It's much smaller than I would have. Would have liked because, you know, I would have liked to see a lot more meat on the bone. But there was 27 years of history, really, like the founder and, And. And all those.
- [39:15]
Will Smith
Can you give us some numbers around the business?
- [39:17]
Sean Daly
The company was doing about, on average, over the last three years, they were doing about 1.5 million in revenue and about close to, I'd say, almost 200,000 in net income. SDE, whatever you want to call it, I guess, but net income, because I wasn't going to make a whole lot of changes to. To back office, you know, and I did, but at the time, I wasn't. And. And so.
- [39:45]
Will Smith
And employees.
- [39:47]
Sean Daly
Yeah, they had about nine employees. And. And then, you know, they had an office location and five trucks. And then, I mean, it was a pretty straightforward business. And they had customers that kept coming back in.
- [40:06]
Will Smith
27 years old.
- [40:07]
Sean Daly
Yeah, 27 years old. And thousands of customers that. That kept coming back. And so, But. But you could just tell that they didn't really pay much attention to their online presence. I mean, I knew that they had good projects and that they. Because customers kept coming back, but their Google rating was a 4. 3. You know, I was like, okay, well, I can get that up. You know, so there were. There were just things that I felt like from my experience and also from a sales perspective, I was like, all right, this is how we're gonna. This is how we're gonna do it. Right. So I felt like I had a pretty good plan. Yeah.
- [40:41]
Will Smith
And. And so is. Is. Are all those levers that you saw to pull this that you could just go in and start executing? Is that what gave you the comfort you needed to buy such a small business. Small. From the perspective of SDE, 200,000 ain't much. I heard you talk about building a sales team and that, you know, you would take the profits of the, of the business to do that feels like 200. That feels low to be able to build a whole sales team. But I don't know what it costs to build a sales team. Also you got to get paid or, or do you. So, so, so walk us through how you reconciled this small SDE number.
- [41:21]
Sean Daly
I have a lot of experience with offshoring at Expotile. We offshored a lot of stuff. So I felt like I could build a really lean sales team in Latin America. And we did. So day one, we ended up. It took about 30 days. But the, the plan was implement a new system which we did, new back office system to be able to manage all of our, you know, get off the whiteboard, get off the, the punch cards, move to a. So we did that and in about a week and a half we, we went to a new system. So we moved very quickly on it. That ended up being more successful than I thought it would be. Although, you know, those things are always painful. Right. But it was moved faster than I thought it would.
- [42:13]
Will Smith
What do the following Acquiring Minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum. They all went through the Acquisition Lab, the accelerator in community for people serious about buying a business. But they represent just a sliver of the Lab success stories. The number of deals across the lab's cohorts now stands at over 120 with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build, the book that introduced so many of you to the very idea of buying a business. The lab offers a month long, intensive, almost daily Q and A sessions with advisors, live deal reviews with Walker, deal team introductions and an active community of serious searchers. Check out acquisitionlab.com link in the notes or email the lab's co founder, Chelsea Wood. Chelsea buythenbuild.com Sean, I just want to make sure, I want to understand your psychology before you've done all this stuff as you're contemplating buying this business. 200 SDE is really low. And so I want to get your thinking before you're actually in the business as to why buying such a small business, how it makes sense.
- [43:38]
Sean Daly
Right? Because.
- [43:39]
Will Smith
Because your other opportunity was a million and a half.
- [43:41]
Sean Daly
Yeah, well, I looked at it a couple of ways. I. I that, that, that this for me looked a lot like even though it was 27 years old, it looked like a lot like a startup, right where I can come in and implement changes in order to modernize the business. So I looked at it kind of like a startup and, and that I had a, I had a real head start with. So I feel very comfortable, you know, in environments that are chaotic and you know, there are, I've been in a lot of them and I, I knew there would be a little bit chaotic, but nonetheless and maybe not as steady as, as other, as other entrepreneurs in this space are looking at. But I said, you know, I could put my money into a startup literally from 0 to 1. I could start a, an H vac company, buy trucks and then go out and you know, do marketing, etc. Or I could use that in this business and just rearrange things. And I said I could, I could definitely build a sales team in Latin America that would be very low cost and very high yield. At least I'll try. And then I can also outsource all of our back office activities to, to Latin America as well, which would bring our down. I'd save probably, you know, 50, $70,000 a year and be able to put that back into sales and marketing. Some of those plans worked really, really well and others, those plans fell completely on their face and that's okay. I felt very comfortable in an environment where it was going to be like pretty fast, heavy changes and, and that's okay, you know, and okay, great.
- [45:20]
Will Smith
And we're going to spend time on your building out of these sales teams and what worked and what didn't because you shared with that with me on the pre call. But before we move into sort of your ownership and operations, Sean, what can you tell us what you bought the business for, how you structured the deal. And, and this question of did you expect to pay yourself or were you able to not have to do that? You had this exit, you know, are you, are you basically able to reinvest all of that, all of those earnings back into the business? So terms of the deal, first I.
- [45:58]
Sean Daly
Bought the business for 700,000. The I put $630 in cash, I bought it and $70,000 seller note. So that's different from what others have done in the past. But I did that for a couple reasons. Number one is because in order to be competitive on this deal, there were other people that were, that were trying to buy this business. In order to be competitive, I needed to stand out more and putting SDA SBA debt on it on the table would have just extended the deal longer and I probably would have lost it honestly. And so I decided to go just cash deal. That was the strongest offer in terms of speed to get it done, which is what he wanted. He had a couple deals fall through because of SBA and he says I'm not interested in doing SBA anymore. And just sort of proceeded with with beyond the fact that we got along well, you know, I think I did have a competitive deal so I beat out the others.
- [47:10]
Will Smith
Sean, I I wonder so I the episode that will have aired just before yours with Jonathan Bornagol. I interviewed him a couple days ago. Bought a business in in the Dominican Republic actually he's Dominican and bought one in the doctor home in in Santo Domingo. And it was really a, a growth equity story. So he didn't put any debt on the business. It was all equity. And but, but then it was really his imperative to. To grow it grow it grow it. And so I wonder if there and we talk about how a growth equity deal is is the way you think about it is is really different. You're taking more of a teenage business into adulthood as opposed to often many of the, the types of businesses that we talk about here are already adult businesses and in those types of businesses debt on because they're safer, their cash flows are safer and so you can leverage them, still grow them. But. But there isn't quite the mandate to grow. And again as you put the deal together, the as you kind of engineer the deal, you can use debt, not just debt and equity. But in your case, Sean, it's similar. You didn't use any debt. Now you said you didn't use any debt partly to make your or maybe primarily to make your offer competitive. Your seller had basically explicitly said no sba, so kind of you didn't have a choice. But the way it shakes out starts to echo Jonathan situation where you're buying and what I heard you also just say is you really saw this as a startup. So it's almost like you were thinking all in terms of equity, no debt. You're not going to try to pay down a loan here. You're going to. You're thinking about this as putting in equity after equity after equity. But the mandate to grow there is going to be much stronger as well. You need to grow out of that 200,000 quick.
- [49:03]
Sean Daly
Yeah. So your return basically the return on equity is is. Is the case if you, if you put debt on a business, your return on equity is is because you're, you have put out very little cash on it, on the business. Right. And then the return on equity on a, on a business where you don't have any debt, you have to, is through growth. Right. So, so I knew, I know I have to grow the business. I plan on growing the business and I'll do that through more acquisitions and I can do that also organically. So, you know, trial and error, it may take a little longer because you know, than a typical startup, but that's okay, you know, and I don't have a lot of investors right now. I mean it's just, just me. It's my business. And, and so, you know, I'd like for it to grow 400% year over year like we were doing at Expetitle, but it may take a little longer and that's okay. I'm also looking at this like a long term thing and I, and I think that that's a, that's a critical piece. I'd like to be in this business for some time and just continue to grow it and, and grow it successfully. And I'm sure that, you know, I'll, I'll make the money that I need to make over, over a period of time, you know, but, but 100 like it's going to be through growth.
- [50:24]
Will Smith
Fantastic. Okay, Sean, thank you for all of that. Anything more to say about the deal itself or can we turn our attention to now all the things that you've experimented with as a good 0 to 1 entrepreneur inside this business?
- [50:39]
Sean Daly
No, I think that that's a good turning point.
- [50:42]
Will Smith
Perfect. Let's hear. Why don't you give us a quick list of the things that you did. You, you, you said to me that perhaps it was a little overzealous. So tell us kind of bullet points of what you did and then reflect on would you move as quickly as ambitiously if you had it to do over?
- [51:03]
Sean Daly
I don't think I would change anything because I think that if you make mistakes along the way, it's okay as long as you're learning from them.
- [51:11]
Will Smith
Yeah.
- [51:11]
Sean Daly
And, but, but I, I think that there were things that went extremely well and then there are things that didn't go the way I wanted them to. The. We did a few things. So obviously going into technology, we, we transitioned to a new back office system in about a week, week and a half. That was overzealous, but in a good way. It was painful for I'd say about a month transitioning clients and stuff and o invoice and I got two invoices or whatever, but, you know, handling a little bit of chaos, a little bit of messiness and then about 30 days later was fine. I think it's better than trying to transition over a year. But that went very well. We began to offshore our back office activities. We took permitting offshore, we took HR offshore and, and we try to take incoming calls offshore as well. And I built a team in Nicaragua and so I have a, I have a full team in Nicaragua of, you know, handful of people out there and, and they're doing a fantastic job. Right. And that went very, very well, except the inbound calls. And so permitting fantastic hr. Great. You know, all those things went well. I think what I learned was, is that when you're dealing with a nuanced industry and they're calling in, they're going to have questions and you want to make sure that you have somebody that knows how to answer those questions. Otherwise there's this phone tag between the, the technical lead and, and the person answering the phones. So we ended up bringing that person back and she's great, she's fantastic. But that was also a learning lesson. And then we built a sales team. So I hired four people in Nicaragua to, to handle sales. One was purely in charge of estimations and signing service agreements, which the company had no service agreements when I, when I started. And, and then, and then also handling estimations. And the bet was that if we hire somebody in Nicaragua, we'll be able to close more business because we have somebody fully focused on it. And the answer was definitely yes. We, I saw that in about a week we closed a $4,000 change out that we definitely would not have gotten if it weren't for somebody being fully focused on it and doing all the follow up, et cetera. Now this person didn't have any experience in H Vac, neither did I. But we figured it out and, and so we started closing more estimates and, and now, you know, I think that, that, that was a big success. We hired two other people that were going to do cold outreach. They were going to call homes and businesses and try to sign service agreements over the phone. We started doing over 100 phone calls per day, building lists. And we got, we looked at, we looked very heavily at our numbers in terms of what we're spending for outreach and for roas, our return on ad spend, target, which we try to target well over 300% and cost per lead, which we try to get, you know, under, under $100. But the ROAS targets that we were seeing on some of our online marketing was way, way lower than what it was for our outbound efforts. And I basically had to shut it the whole thing down after about 45 days because our, our, our cost per lead was over $1,000, which was, it's not going to work. And then some of our other marketing was, was producing our expected return. So you know, again, there are things that work and there are things that don't work. And I think that, you know, in those cases, the things that did work, I did, I, I believe are outweighing the things that don't.
- [55:18]
Will Smith
Much stronger bunch of follow ups here, Sean. First of all, it's one thing for you to be comfortable in chaos and experimentation, but one of the perils of this path, entrepreneurship through acquisition, is that you have to blend your, your appetites with those of the team that you inherit. It sounds like you said there was chaos for a week and a half with the new tech, but that it settled out by, by a month after. A month after the changes. But any, anything to say about your team absorbing this chaos, about your team absorbing these changes? Because part of the reason, part of the reason the conventional wisdom in this space is to go slow with changes is, is because there's all these other people that are involved and you just, it just often will blow up on you if you kind of try to cram it down.
- [56:15]
Sean Daly
I think it's all about how you handle it. You know, at the end of the day you're coming in because the seller sold their business and now you own it and, and you know you're going to run your business the way that you feel is best. Will there be some people that might fall through? Sure. You know, that's, that's okay. But I think that if you're handling it the right way is what's important. What I mean by that. I'll give you an example. So when we transitioned after a, a week I think was off of the. Well, transitioning off of the punch cards took a, took a little bit longer because switching payroll providers does, is, is painful. But nonetheless we, we transitioned to the new, to the new payroll system. We went off of the, the old punch system onto a digital punch. And I came in on the following Monday or Tuesday and, and the punch system was still there. And I was like, why is this still here? Like we don't need this. And, and then somebody told me that there was a tech that was still using the punch system. So I threw away the punch system. I literally threw in the trash. I said okay, that's the end of that. And then the next day I got a call that that worker decided not to come in. And I was like, okay, so we have somebody that's not willing to use a new system and putting our customers at risk. I called the individual and I said, today's your last day. And so that was it. And I think that, you know, if you're, if you're, if you're doing things because at the end of the day you believe that is the absolute best thing for the business and not ego driven, but because it is the best thing for the business. I think people, you, that makes it a lot easier to have conversations internally, right? If you're, if, if so if you're talking to other people about the decision that you made. There's no, there's nothing ego driven about it. I'm doing this because of this, that and that reason we have somebody that came in, well, didn't come in and put our customers at risk. Do you want somebody like that on your team? I think the answer is customers at.
- [58:39]
Will Smith
Risk by him using the punch card.
- [58:41]
Sean Daly
System, not the punch card system. Not showing up because he, he didn't want to use the new punch card system. So the new punch system. So I think that if you at the end of the day believe that what you're doing is the best thing for the business and it, you can and have the right conversations, you know, you can handle a lot of stuff. I mean we, we've, we've had upset customers, this, that and the other. Just leave your ego aside. It's a business decision and, and you talk to customers and you just try to work it out with them. Right? And so if there's one thing that is absolutely certain in business is that it's driven by people, that means it's, it's going to be an epic disaster all the time. Right? And it's 100 about how you can handle a situation yourself in, in handle those situations that'll allow the business to proceed. If you are, like I was saying, the trickle down effect. If you are being emotional, emotionally driven, if you are being a wreck, if you're having crazy conversation, guess what? Those people are going to have those same type types conversations with each other. You are the leader of the business and you own this business now and you're going to take it into a new direction. And I'm sure that there are going to be things that they disagree with. I'm probably one of the most open to feedback people you'll ever meet. Honestly, I, I take into consideration what everybody says, but at the end of the day, I'm going to do what I think is best. And I think that that's probably the. At least there's one person that's defining that. Right. Which is, which is important. I don't know if that answers the question, but nonetheless, that's, that's sort of what I believe and what has helped, you know, in times of, of chaos, which there always are.
- [60:31]
Will Smith
Yeah, well, it certainly, it certainly shows your leadership style there, Sean. You're very decisive, and you are, you are not vulnerable to what so many searchers appear to be vulnerable to, which is pressure coming from these, from members of the existing team. You, you, you sure didn't seem intimidated by this person's unwillingness to follow the rules or how it would look or how the ripple effects of firing this person readily.
- [61:10]
Sean Daly
There, there are, there are. You just have to be aware of things that can, that can. Like what is something that could literally shut down the business. Right. Not having a license. So you have to be aware of that. So you, you know, you have to, if somebody is holding a license, you have to handle that differently from somebody that's doing something different. Right. So there's a difference between making a business decision that's going to help the business and a decision that is emotionally driven that could shut it down. You know, there, there are different ways to handle things in, in, in every day that come up, but you just have to sort of. There may be a backfire on it. I don't know. Three people could have walked out the door, but they didn't, you know. Yeah, yeah, because at least I like to think, because they probably deep down knew that it was the right decision, too. And by the way, that wasn't, that wasn't the only one. We had another, another person that, that one of our texts called me and said, hey, we're having a problem with this guy. That was his last day. Right.
- [62:10]
Will Smith
So, like, what, what was the problem? I mean, how, how bad was it that you. I don't get so decisive.
- [62:15]
Sean Daly
I don't want to go into it too much. You know, honestly, he's, he's a good person. Right. And, and, you know, at the end just wasn't the right fit. But we've, but we've, you know, the way that you can, the way that you have a better chance of, of just letting things, letting things linger, and I think it's just worse is by not being decisive. And if you're going to be decisive, just do it, and if there's fallout from it, then you're just going to have to handle it and learn from it, you know, so, like, and, and, and, and I'm sure that there was some, some, some questions around the technology that we implemented, you know, the back office system, but we just did it, you know.
- [63:00]
Will Smith
Well, well, Sean, you know, the other thing that I, I think that people might react to depending on whether or not they have management experience. And of course, a lot of searchers do not have management experience. This is, you know, and that's one of the kind of ballsy things about search. It's like I'm not only going to buy somebody else's business, I'm going to manage a team of people and I've, I may never have anybody in my life. Your management chops or whatever, your leadership experience, your comfort with this is something that a lot of I assume comes from experience, probably also personality, but it's something that other people won't have. So, so one of the challenges of this path for many searchers is, is learning how to fire people for the first time. For example, learning how to be a leader, indeed, learning how to be a leader. And many searchers have not been a leader and kind of, you know, characteristic number one of leadership is being decisive, particularly in the face of hard decisions. And you seem right at home there. So.
- [64:00]
Sean Daly
Yeah, I mean, I, listen, I, I, I think that it takes, it takes a while to learn about this stuff. And I'm not saying that I'm, that I'm the best leader by any means necessary, but I definitely have scar tissue. Right. And I've, and I've had, I've gotten burned and I understand what it, what it's like to be on the other side too. Right. I would rather, if I were sitting on the other side, I'd just rather bullet to the head, you know, don't, don't give me a, to the chest. So I, you know, so, so I think that, you know, you learn this stuff over time and, and, and I think for the surgeries out there, you know, you're definitely going to learn it one way or another.
- [64:46]
Will Smith
Yeah.
- [64:47]
Sean Daly
You know, like, it's, it's, it's a, it's, and it's a fun experience. I, I, I honestly like, and I, I don't know, we don't need to get too heady, but I honestly just love business, you know, and I, and I think that the challenge every single day of, of making mistakes and I've gotten to the point where I literally Like I'll, I'll mess something and it's just like, okay, you know, like I bounce back and. Because it's, it's all about how quickly you bounce back. And facing the challenge of, of every single day is, is what makes it, is what makes the whole process exciting. And, and as an exited founder that has sort of reached, quote, unquote, I guess, the, the promised land, you know, and it, you know, it really is, it really is the journey, you know, it really is the journey that is the destination. So enjoy the process, learn, and that's it, you know.
- [65:43]
Will Smith
Great, great, great thoughts, Sean. Okay, still a little bit to go here. So I want to, I want to move us along a couple more things on everything. You. All the operational changes you made sounds like you offshored pretty much everything you could. I mean, obviously, except technicians in the field. Do I have that right? It sounded like every central function has been offshored.
- [66:07]
Sean Daly
Except front desk.
- [66:09]
Will Smith
Except front desk.
- [66:10]
Sean Daly
Yeah, front desk and answering calls that I learned, you know, in some ways, you know, the hard way. But a couple of technicians had a, had feedback for me and they were like, listen, you need somebody at the front desk. Like, we're getting way too many phone calls from your team in Nicaragua. We can't get our jobs done. And so, you know, and so, and.
- [66:35]
Will Smith
So let's double click on that. You touched on it earlier. So you had this, you had the front desk be in Nicaragua. They were getting these technical calls about something not work. You know, whatever consumer homeowner has, their air conditioning isn't working. And so those people in Nicaragua were not equipped to troubleshoot over the phone and to identify the problem. So they'd call the text, relay the information, text would call them back, then they'd call the home back. So this daisy chain didn't work, right? Am I getting it right?
- [67:03]
Sean Daly
That's right. What I've learned is that in sales and marketing, you can know enough in order to be able to sell. But in project management, you know, and managing the change outs and managing the jobs, etc, people are an issue. They need to have an answer or somebody experience. In the project management side of it or the service side of it, you need somebody with experience. And it took some trial and error, but now I know that that's, that's the way to approach it. So when I do my next acquisition, that'll be something that I already know and I'll be able to take all those back office functions from the business and take them offshore and I'll just build the team from there I'll take all of the sales functions into, into Nicaragua and then, and then I'll leave the front desk person or perhaps combine the two. So you just, you know. Now I know.
- [68:02]
Will Smith
And so to be clear, when we talk, we keep saying front desk. That you don't mean literally front desk. That's the vocabulary for people who manage, manage a job. Once the job is sold. They're the, they're the point person to the homeowner.
- [68:17]
Sean Daly
Just are. No, it's, it's, it's front. So it's a combination of like, you know, just being that first line of defense when somebody calls in. But if it's related to sales, that's routed to our, to our sales guy. And that if it's an estimation, if it's something that. So like anything sales related goes to our, our sales guy, but anything other than that, it stays with our front desk.
- [68:38]
Will Smith
Okay. Okay. And then, so you, I guess you just touched on my final question was going to be how does the offshore people do, for example, estimating? And, and, and you've said sales and I was gonna ask sales too. You've said that basically to sell you don't need tons of expertise. So that can be, that can be done in an offshore capacity estimating as well. I guess estimating in sales is kind of the same in, in this, in this world. I mean, I'm just. It helped me visualize somebody sitting in Nicaragua and being able to accurately sell and estimate and sell a homeowner on their broken AC unit.
- [69:17]
Sean Daly
Well, I mean, if it were impossible, then software companies wouldn't have inside sales teams. Right? You don't have to be a technical person to sell software. You don't have to be a technical person to sell an AC unit. You need to be able to sell it and you need to have enough knowledge to be able to sell it. So do you need to know what an air handler is? Yeah. Do you need to know if it's variable speed versus two stage or whatever? Absolutely. Do you need to know the ins and outs of how they work? No, because at the end of the day you templatize these things. We build a calculator, we build a price sheet. So basically we calculate all the costs that go into it which are provided by the technical person that goes out to view the property and to help us estimate, you know, labor, etc, we put that into our calculator, we run it through the sheet, we spit out our margin and we price it out. And then, you know, in sales, knowing the product is probably not even as much as, as important as follow up. And like the, the how, how you handle your follow up. So have, we've gotten phone calls from our suppliers saying like, I can't believe you. Somebody that doesn't know these things. But I tell them, like, well, first of all, you need to handle it because that's who your contact is. But number two, like, I guarantee I didn't say this to them, but I guarantee you that that person would be better at selling than you are, even though you know the product better because they are so much better at follow up than you. And, and so when you're selling, you need to know the product, but you need to get that person comfortable that you're the person for the job. And, and I think that we are standing out, you know, in front of a lot of these deals because we get people comfortable with the, with, with that. And I, and I think that that's important. More important probably than knowing every nuance.
- [71:10]
Will Smith
Okay. And, and sorry, just. So you have somebody go and do. Go to. In. You have somebody in the field who goes to the homeowners.
- [71:21]
Sean Daly
Yeah.
- [71:22]
Will Smith
And then it goes back. And then they collect information. It goes back to Nicaragua.
- [71:25]
Sean Daly
Yeah. It's like, okay, this isn't an attic. We need this. We need the other. It's going to take extra long because it's in an attic or because we need, it's going to be outside. We need a concrete slab, we need these materials, etc. We price that out, we put it through our sheet, and then once we have that information, we follow up on it. Right. We get our suppliers to send us our prices, we put it through the sheet and then it's just a matter of.
- [71:47]
Will Smith
I see.
- [71:48]
Sean Daly
Selling.
- [71:48]
Will Smith
Okay, okay. All right. So there is somebody at the house. The technician. Technician feeds all of the information about the situation to the salesperson. Salesperson takes it from there.
- [71:58]
Sean Daly
Yeah. Because the chances of you selling something like on site probably not going to happen nowadays. They're going to shop it. Right. I mean, I don't know. Maybe other people have the secret to success, but I don't, I don't really see it happening like that. So who's going to manage all that follow up? You need somebody. Well, in our case, at least we need somebody that's, that's focused on that.
- [72:24]
Will Smith
So we're, we're going to start wrapping up here, Sean, but just to go back a little bit to the marketing that you mentioned, so you are really approaching this from a sales and marketing perspective. And on the Marketing, you of course, sales teams that we've already been spending a lot of time on offshore sales, also getting leads from Google. So, so where did all these channels shake out? What works, what doesn't? What's your cost per lead now how have you improved the, have you basically added new lead flow to this business? Net it out for us.
- [73:00]
Sean Daly
So it is very challenging because as you mentioned, we are, we don't have as much net income so we have to be very selective, right? If you're working at a, if you're, if you're, if you have a startup and a VC dumps a couple million dollars into your bank account, you have, you can test a lot of different channels. If, if, if you're spending a couple thousand dollars a month on a, on a marketing channel or you, if your total spend is a few thousand dollars or whatever the number is, you have to be very selective, right? So when our first quarter in the business we did everything was outbound based and quickly found that that didn't work for us in terms of what we wanted to accomplish. It might work over the longer run but, but it didn't work for what we wanted to accomplish. We tried different channels and again being selected maybe three, four channels at a time, sometimes one or two and then getting ourselves enough time to be able to see if we're going to hit our ROAS targets. On some of them we have, but with caveats like we have to do this, that and the other. Like we have to close this amount, we have to do this amount in order to be able to sustain our ROAS targets. Which you know, a running number is about 300%. Right? That should, that should be it. That should do it. And so if, if, if that's the case, we, we do have some things, but we have caveats associated to that. And then the question is on, honestly, sometimes you just sort of have to balance that with, with intuition which is like are we spending enough on this channel too in order to give it the chance it deserves? And, and so there are things that you have to kind of weigh. I think that we've got a few channels that are working well for us and we'll continue to go down those, those paths. But at the same time I'm kind of kicking myself because I'm like we could be doing so much more, right? And if everybody feels this, you could do so much more if you just had a little bit more money. And it doesn't change at any size. But, but yeah, I think that in terms of the things that we're doing. What I'm most proud of is that we're learning very fast and there are channels that are working for us, but I know that there's a lot more out there that we could be doing in order to, to be doing better. And we'll eventually get there too. Right. So, and that's, that's, that's what we're looking forward to.
- [75:43]
Will Smith
Okay, and how long have you been in the business now? And, and can you put any numbers to where things are today versus when you bought it?
- [75:50]
Sean Daly
The business is on Track to grow 20, 20, 30% over the next six months, and then I'd like to see that grow significantly more over 2025. Our net income has considered all the things that we've done and all the mistakes we've made is actually stayed steady. So I'd like to see that number increase as well. Make no mistake, every business is incredibly challenging. And there are challenges in this business that I had never really seen before. Every business in every industry has their challenges. I'm sure you've heard about cash flow challenges. There's definitely an issue in this industry having the right team. Definitely an issue. So I think that over the next, for me, I'm totally okay not growing 400% year over year, unsustainably. Right. In order to be able to make sure we have the right foundation in the direction in which we're going in. Because I know over the long run it's going to make that much more of a difference. So I feel very good about where we're going. Every day is incredibly challenging and it's exciting. You know, it's fun. I have no idea where the train is going. I have a general idea, but that's part of the fun.
- [77:27]
Will Smith
Well, I love that, Sean. I feel like I'm hearing a story of somebody who, you know, you are, you have a giant bias toward action, toward moving fast and breaking things. Forgive me to use the Zuckerberg ism, but at the same time, you also have kind of an investor mindset where this is a long term play for you. You're building the foundation now you're laying the foundation. You're not breathlessly trying to grow just absolutely as fast as possible to, to be able to brag about some short term, you know, grew it by X and, and Y number of months or years. So, so in some sense, in some sense, I feel like it's the, the healthiest of, of both. The healthiest. You know, you, you're, you're, you're a La carte picking the best of startup Land, which is experimentation, learn quickly, iterate, iterate, iterate and don't be afraid of some chaos. Don't be afraid of making mistakes. Indeed. The faster you can make mistakes, the faster you're getting better and learning. So you're a la carte picking that from startup land and then from kind of investor, you know, kind of value investor, compounding Buffett psychology. You're building the foundation with the idea that this will be long term. And, and, and you know, you, you're not just trying to grow for growth's sake as quickly as possible. You'll get there. Yeah. Did I encapsulate it or do you want to tweak any of that?
- [78:59]
Sean Daly
I think that that definitely encapsulate, encapsulates it. You know, it's, it's fun. You know, at the same time I, it's, it's incredibly challenging no matter the size of the business, no matter what your past is. So I did, you know, just try to, try to enjoy it even though everybody has sleepless nights.
- [79:22]
Will Smith
So what you're saying is my, my, my grand articulation of all of your a la carte theory picking here is really, the point is you like business and you're having fun. That, that's really, that's really what this story is.
- [79:35]
Sean Daly
I'm not necess, it's not that I'm having fun is just that, you know, when you, because there are going to be moments where you, you get punched in the gut and, and they're going to be the way I see it, if we have another minute. But the way I see it is, and I've gotten to this point about the way that I view life and business is that you're going to have something really good happen if you're, if you're doing the right things and you're moving forward, you're probably going to have something really good happen every two to four years in, in business. Okay. The rest of the time while that's happening, you're grinding like crazy and punches in the gut, little, you know, shots of insulin in the arm, you know, sugar rushes, this, that and the other. Ups, downs, clients pissed off. 1 star review. 105 star reviews, this and the other. And it's going to be chaos until that time where you get that hire that you've been missing. You, you know, get growth equity, you get a big client that has, allows you to have a somewhat of a breakthrough. So if you are looking at that down the line and saying like, okay, Something good is coming. I just have to continue to stick it out. And that what is happening right now is, is just part of the learning process. I think that that can really help you get out of bed with a pretty good attitude, you know. And that, that definitely helps me.
- [81:13]
Will Smith
What's, what's the magic in two to four years is that just kind of like how long it takes to really build value through a grind set and then you're bound to see some sort of, some sort of event spring from the grinding of the last four years.
- [81:31]
Sean Daly
Yeah, I, I think that that's where the compound effect from your efforts start to take effect is every two to four years and also if something really bad happens, which is, you know, every seven years where the economy, etc, every five to seven years, then it takes about two years to climb out of that. Right. And if you continue to. So it's all about like. And there's a reason why startup vesting schedules are four years. There's a reason why, you know, there, there are the president's around for four years because things happen every four years. Right. So every two to four years I think is you know, two on the more I guess you say like if things are really going well, four years if it's pretty, pretty average. And so if you just continue to stay consistent, continue to grind, deal with the chaos, deal with all the stuff that happens, your, your efforts will get to a point where there will, something good will happen in that time frame. And I think that that helps push.
- [82:31]
Will Smith
You along, get out of bed in the morning.
- [82:34]
Sean Daly
Yeah. I mean every, every interesting perspective difficulties. Right. Everybody has challenges and, and, and I, and I do believe that everybody has a fairly similar entrepreneurial journey. Right. I've had failures just as everybody else has had and, and I've had big ones. But, but it's almost like you got to be that clown that, that you know, the one that falls over and picks back up when you punch it. You know, like a little. The faster you get up and, and keep going and, and tell yourself all the lies in the world in order to be able to do it.
- [83:08]
Will Smith
That that's it, I'm good enough, smart enough and doggone it, people like me.
- [83:15]
Sean Daly
That one.
- [83:15]
Will Smith
This is all Stuart Smalley.
- [83:17]
Sean Daly
Exactly.
- [83:18]
Will Smith
Sean, what didn't we, what didn't we get to that you wanted to share anything. I got something. I got one other topic. It's, it's clear that you're sales oriented. You had a career as a salesperson. Your focus in this business has been sales and marketing. Most people coming to this world, whatever, salespeople, are a minority that are, they're coming from kind of a hardcore sales background. We hear finance a ton, of course, we hear just kind of consultant, general business, we hear tech, all different walks of life. But, but I guess speak to the intersection of sales and eta.
- [84:02]
Sean Daly
ETA is sales because you have to, you have to sell yourself. First of all, you have to find a company. You have to sell yourself to the founder, you have to sell yourself to lenders, you have to sell yourself potentially to investors. You have to sell yourself to your, Once you buy the business, that's where the real selling starts. You have to sell yourself to customers, you have to sell yourself to employees. You have to sell. If, if you're, if you believe that, first of all, no salesman thinks that they're a salesman, but if you don't, if you don't believe that you're in this decision.
- [84:37]
Will Smith
I don't get it.
- [84:38]
Sean Daly
I, I, I was a joke. But the, but the reality is that like, you know, nobody likes to think that they're a salesman because they don't want to be sold to. So therefore they don't want to feel like they're selling to others.
- [84:48]
Will Smith
Ah, like the connotation is.
- [84:50]
Sean Daly
But, but nonetheless, if, if you don't think that you're selling, then if you're mistaken, you're constantly selling. You're constantly selling. And, and if you want to grow the business, you're going to have to sell more stuff to your clients, you're going to have to sell your business more to, to, for more employees that you hire. And, and so ETA is sales. It's literally what it is.
- [85:17]
Will Smith
Okay, Sean Daly, if people want to reach out to you, how do you like them to do that?
- [85:22]
Sean Daly
I'm, I'm pretty active on LinkedIn. You can find me on LinkedIn. Happy to connect. And yeah, I mean, I'm a pretty, pretty, pretty accessible person, I'd say, and open to thoughts and, and yeah, I would love to connect with new folks all the time.
- [85:38]
Will Smith
Great. Well, Sean, thank you for coming on. Congratulations on being such a good clown. Punchable clown. That just gets back up.
- [85:48]
Sean Daly
Emphasis on the clown.
- [85:50]
Will Smith
Yeah. No, congratulations on, on all these interesting twists and turns in your career and we love having you over on the ETA side of the fence as opposed to 0 to 1. Fun. While the insight that you can bring from 0 to 1 land and infuse into this.
- [86:06]
Sean Daly
Never say never. Who knows, maybe I'll end up starting a business from scratch again. I mean, technically, I kind of did by starting a search fund. Right? I mean, you're starting something from scratch and jumping off a cliff. It's different. But you know, never say never. I, I could get on the VC treadmill again, but, but I think that this is for where I am in my life and the, and the people that I'm working with and what I'm looking for. I think that and the people that I'm working with especially, it's a great place. So I'm happy to, happy to help others, you know, help them attain their goals. And hopefully this, you know, this podcast provided a little bit of, of thoughts that they can take away from as well.
- [86:47]
Will Smith
It did indeed. Sean Daly, thank, sir. I hope you enjoyed that interview with Sean Daly. If you want more Sean, if you have a question for him, come to the live Q A that we're doing with him by Zoom on Tuesday, March 18th. Sean will come just to answer your questions, direct questions from you, the listeners of his Acquiring Minds interview. Register for that at the link in today's show notes or in the YouTube notes. If you're watching watching on YouTube or at acquiring Minds. Co. Come to Sean's live Q and a on Tuesday, March 18th. Register for that at the link in today's show notes, in the YouTube notes or at Acquiring Minds. Co. See you there.