From Startup to Franchise: What Actually Works with Alex Smereczniak

Summary

Podcast Summary: Escaping the Drift with John Gafford

Episode Title: From Startup to Franchise: What Actually Works with Alex Smereczniak
Date: December 23, 2025
Guest: Alex Smereczniak, founder of a college-based laundry startup turned franchise, and Franzi (a “Zillow for franchises”)
Host: John Gafford

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Episode Overview

This episode explores Alex Smereczniak’s entrepreneurial journey, starting with his college-based laundry business and leading into his latest venture, Franzi, a platform designed to democratize the franchise buying experience. Host John Gafford draws out practical lessons on partnership, arbitrage, scaling, franchising, and building data-driven marketplaces, all delivered in a dynamic, candid conversation loaded with actionable wisdom and real-life stories.

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Key Discussion Points and Insights

1. Origins: Small-Town Roots and the Drive to Break Out

[04:30–10:00]

• Alex grew up in Red Wing, Minnesota, a small town known for Red Wing Shoes.
• His parents emphasized both “roots and wings,” encouraging Alex and his siblings to experience life beyond their hometown.
  • Quote (Alex, 06:13): “They did a really good job with me and my two older brothers of, like, go see the world... my mom says, roots and wings.”
• Advice to those in insular communities: travel and see other cultures, even on a budget.

2. Early Entrepreneurial Experience: The College Laundry Business

[10:00–18:00]

• Started as a bag runner in a student-run service (Wake Wash), Alex saw an opportunity to buy and grow the business.
• Navigating the purchase: raised money, engaged finance professors for guidance (discounted cash flows, seller financing).
• Partnership lessons: importance of complementary skills, not just convenience or similarity.
  • Quote (John, 15:06): “If you have three people that are all putting input into a business and they all think the same way, two of them are not necessary.”
• Structured the buyout and learned fundamentals of equity, sweat equity, and partner contributions.

[18:00–26:00]

• Business success: Secured university partnerships, dramatically increased revenue (from ~$28k to several hundred thousand in orientation season).
• Exited thoughtfully: sold the business upon graduation, setting up a legacy for future student entrepreneurs.
• Lessons: Hands-on experience superior to classroom learning.
  • Quote (Alex, 26:29): “Nothing will replicate that. Hands on, down and dirty, failing, iterating, moving quick—nothing replicates being in it.”

3. Scaling Ambitions and Hitting Bureaucratic Walls

[28:38–30:57]

• Attempted to scale the laundry business to other campuses but met university bureaucracy and resistance.
• Realized not all good ideas scale easily due to outside constraints.

4. Transition: Corporate World and Rediscovering Entrepreneurial Drive

[30:53–36:19]

• Joined Ernst & Young after selling the college business.
• Quickly realized he was “chronically unemployable” due to entrepreneurial mindset. Frustrated by inefficiencies and lack of impact.
  • Quote (John, 31:36): “We are chronically unemployable… we’re the worst and most miserable employees on the planet.”
• Applied systems thinking and working strategically, e.g., maximizing performance reviews with minimal hours.

5. Return to Startups: Building 2ULaundry

[38:42–41:24]

• Noticed the rise of “Uber for X” startups (Instacart, DoorDash, etc.) and saw a gap in laundry/dry cleaning convenience.
• Partnered with a friend with complementary skills (marketing/sales).
  • Built a tech-enabled pickup/delivery laundry service, first using personal apartments, then scaling to leverage and eventually outgrow local laundromats.

6. Arbitrage and Scaling Operations

[43:11–48:52]

• Used laundromat arbitrage: paying laundromats for off-peak use, effectively generating revenue with minimal fixed assets at first.
  • Quote (John, 43:01): “In my opinion, the greatest thing about America is arbitrage. I love it.”
• Innovated on labor management: implemented gamified leaderboards to boost staff efficiency and morale.
  • Quote (Alex, 48:58): “Gamification, like, was everything. Game changing… doesn’t matter if you’re white collar or blue collar, people want to compete.”

7. From Startup to Franchise: Lessons Learned

[50:33–53:10]

• Transitioned from renting laundromat space to owning large-scale, efficiently designed facilities.
• Eventually began franchising to expand.
• Franchising created new learning curves: regulatory disclosures, partner selection, reliance on franchise sales organizations (FSOs), and high broker fees.

8. Birth of Franzi: A Platform for Franchise Transparency

[54:12–62:38]

• Franzi founded to address inefficiencies, lack of transparency, and high costs in franchise sales—envisioned as “Zillow for franchises.”
  • Provides searchable, data-rich franchise listings, financials, and localized insights.
  • Uses AI to match entrepreneur profiles to suitable franchises.
  • Scrapes and indexes Franchise Disclosure Documents (FDDs) for comparative data.
  • Offers free coaching and resources, monetizing on a flat success fee paid by franchise brands.
  • Quote (Alex, 54:12): “Could we do what Zillow did to the residential real estate buying process …for franchising?”
  • Addresses lack of regulation/business brokerage in the industry and supports data-driven, informed decisions.
• Adoption: Launched in February 2025, over 4,000 brands listed, with 300+ verified.

9. Letting Go: The Art of Delegation

[55:52–57:06]

• John and Alex discuss the difficulties entrepreneurs have handing off tasks.
  • John’s test: “If what they do is 80% as good as I’d do, it’s OK—because in truth, it’s probably 120% as good. The 20% margin is my ego.”
  • Alex: “Now I can delegate. I don’t care anymore… Please, take more!”

10. Capital Raising, Team Building, and Long Term Vision

[57:19–59:13]

• Franzi raised $3.5 million; focus is on tech investment and marketplace flywheel.
• Use of AI to process massive data and personalize franchise recommendations.
• Ensure incentive alignment: Franzi operates on a flat fee, not per-brand commissions, striving to act as a fiduciary to buyers.

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Notable Quotes & Memorable Moments

• Leaving Home: “My mom says, roots and wings… I help you get grounded and you be a good person, but then I want you to get wings and go fly and go do something else.” — Alex (06:13)
• Learning by Doing: “Nothing will replicate that. Hands on, down and dirty, failing, iterating, moving quick—nothing replicates being in it.” — Alex (26:29)
• Entrepreneurial Nature: “We are chronically unemployable… the worst and most miserable employees on the planet.” — John (31:36)
• Arbitrage as Freedom: “In my opinion, the greatest thing about America is arbitrage. I love it.” — John (43:01)
• Gamification at Work: “Gamification, like, was everything. Game changing … people want to compete.” — Alex (48:58)
• Delegation: “Please, take more!” — Alex (56:51)
• The Vision for Franzi: “Could we do what Zillow did… for franchising?” — Alex (54:12)
• Transparency: “This is how capitalism should work, you should run a really good business and if you do that, people want to buy into it. You shouldn’t try to hide.” — Alex (60:27)
• Empowering Decisions: “Build a good network that provides opportunities and then seize those opportunities and go out and chase your dreams—because something as simple and stupid as doing students' laundry can turn into a massive, massive business.” — John (62:53)

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Timestamps for Key Segments

• 04:30 — Alex’s small-town upbringing; importance of seeing the world
• 10:00 — Joining and buying the college laundry business
• 13:02 — Overcoming obstacles to purchase as an 18-year-old
• 15:21 — Choosing partners with different skill sets
• 18:09 — Capping the seller payout and 8x-ing revenue
• 25:00 — Selling the business; emotional and practical lessons learned
• 28:38 — Scaling challenges at other universities
• 31:36 — On being “unemployable” as an entrepreneur
• 36:19 — Applying systems thinking to corporate life
• 38:42 — Realizing the potential for an “Uber for laundry” business
• 41:48 — Early days: running laundry in an apartment; leveraging laundromats; facing skepticism
• 43:01 — The power and necessity of arbitrage
• 48:58 — Gamifying employee productivity—transformative impact
• 53:11 — The birth of Franzi: transparency for franchise buyers
• 54:12 — The Zillow analogy for franchises
• 55:52 — Challenges of delegation for founders
• 57:19 — Cap table, funding, and engineering a two-sided marketplace
• 58:56 — How AI personalizes franchise recommendations
• 60:27 — Franzi’s commitment to data transparency and capitalism
• 62:04 — How to find Franzi and get franchise-buying support

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Final Thoughts

The conversation between John and Alex is as much practical playbook as it is personal journey, giving aspiring entrepreneurs, investors, and business builders a roadmap from starting small to scaling big, including how to learn from failure, structure partnerships, harness technology, and build ventures that solve real world pain points—culminating in a mission to make franchise ownership transparent and accessible for all.

Learn More:

• Franzi: https://www.franzi.com/
• Follow Alex: @alexfromfranzi (LinkedIn, Instagram)

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For Further Listening

• Skip to 15:21 for Alex’s concise advice on choosing business partners
• Check 48:52 for the impact of gamification at scale
• Listen at 54:12 for the inside story on Franzi and the revolution in franchise buying

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If you haven’t listened, this episode is packed with real lessons on taking risks, solving problems, partnering wisely, and building businesses that scale—plus, the candid camaraderie and wit make it a must-hear for anyone aspiring to "escape the drift."

Transcript

[A]

You know what they say, early bird.

[B]

Gets the ultimate vacation home.

[A]

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[B]

Well, whatever you want it to.

[A]

So you can all enjoy the payoff come summer with Vrbo's early booking deals.

[B]

Rise and shine. Average savings $550. Select homes only. Minimum seven day stay required. It's literally one of my favorite words in the entire world, which is arbitrage. A, because it sounds fun, but B, because of what it is. Essentially you're taking a service or you're charging a fee and then you're turning around and hiring somebody else to do it for less. And you're making the difference between what your customer's paying you and for what you're actually paying to do the work. And finance. I love this because you can go borrow money at a certain rate and then you can loan it at a much higher rate, which is something I do with great frequency. Buying not. And you just make the spread is essentially what you're doing is. My point is, in my opinion, the greatest thing about America is arbitrage. I love it.

[A]

So, yeah, examples of it everywhere, everywhere.

[B]

It enables you to start a business without starting a business, which is great. And so many people that are good at a particular service or have a service, like you just said, might be terrible marketers. They might be terrible at driving sales. And you can go into those businesses and partner with them on these margins because they're like, what do we have to lose? We're just here getting business, which is great. And you can take a step further, which we do. I. This is. I do. Which is very good. And I've been criticized by some for what I call it. I call it the Tony Soprano method. And now Escaping the Drift, the show designed to get you from where you are to where you want to be. I'm John Gafford and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along. Escape the drift. And it's time to start right now. Back again. Back again for another episode of. Like it says in the opening, the podcast that gets you from where you are to where you want to go. And today in studio, I got a really impressive dude, man. This is a guy that really. He went to college and rather than saying, hey, I'm Going to go to college and get a degree, and then maybe I'm going to look for a job. This is a guy that said, nope, I'm going to carve my own way. Started a business in college that wound up being incredibly successful, leading it to, like, having, like, 100 locations open or in development through a franchise system which developed a love of the franchising system. And through his, what he perceived as a lack of clarity or a lack of understanding of the franchise deal, he built a new platform called franzi, which is essentially like Zillow, but for franchises, so you can shop and understand exactly what you're getting into, rather than just hearing a sales pitch at some trade show where they have, like, you know, the best balloons or whatnot. So that's what we're gonna do. So, guys, welcome to the program. We're excited today to talk and learn from Alex Smirnak.

[A]

I'm gonna take that intro and just have that for anything I do ever again.

[B]

The goal is to fire. Is to fire you up, dude, and get you ready to go. And also, I forgot to mention entering in a lot of civil world general lookalike contests right now, which is apparently something he's worked at very hard. I'm just kidding. If you look at us on YouTube. You're not watching us on YouTube now. You have to, because you want to see the look that Alex is currently rocking. He's rocking a very Southern gentleman type appearance he has today, which goes with his Wake Forest education he had there on Tobacco Road. So is what he has, which is funny. Civil War General is one of my default voices. I go to a lot. I don't know why, but. So if you want to see what Alex. Alex looks like, please go over to YouTube and yes, please like and subscribe us over there. We'd love to have you over on the YouTube channel.

[A]

So, Alex, I get Hormozy and Thomas Rhett too.

[B]

Yes. Well, see, you're too clean cut for her, Mosi. You got the blazer and. Yeah, you can't do it. You got sleeves on and you don't have the nose thing. I can see. I can see a young Hermosi. I can see. Yeah, you need more of a tank top look, though.

[A]

Yeah, yeah, yeah.

[B]

And then I wouldn't have had a chance to use my Civil War general accent, which I do appreciate, which is great. So obviously you said you're from Minnesota is where you grew up, which is ruining this whole look for me. I know. Terrible. How did you. How did you decide to go to Wake Forest.

[A]

I wanted to get the hell out of six months of winter. So I was like, I need to go experience other parts of the country. I grew up in a small town, 15,000 people. It's called Red Wing. And the only reason you might have heard of it is Red Wing shoes or Red Wing boots. Have you heard of.

[B]

I have, of course.

[A]

So, like, they employ 60% of the town. It's right on the Mississippi. And I was like, I need to go somewhere else and just.

[B]

Well, let's. Okay, let's. Can we talk about that? Because that, to me, is an interesting dichotomy that a lot of people get caught in in these smaller towns. I tell a story about, like, when I lived in Detroit in the late 90s. I was a transplant from Florida to Detroit. Try that. Talk about what that did not. Yeah, my company moved me there. It was terrible. But what I found was it was a very difficult place to make friends because there was this hamster wheel of, like, I'm born, I go to high school, I graduate high school, I get a job next to my dad at the Ford plant. I marry my high school girlfriend, and I buy a house three houses down from my parents. Wash, rinse, repeat. That's what it is. Yeah, but it just wash, rinse, repeat. It just. Every generation just repeats what the previous generation did. And it's really hard when you're in that kind of an echo chamber to kind of see what's possible out in the world if you're in a town where this company employed 60% of the people. Is that kind of how it was where you grew up?

[A]

Yeah, I mean, a bunch of my high school friends are still there, and if they're not in Red Wing, they're in Minnesota still. So I got. My parents are still. That's where my mom grew up.

[B]

Your parents working at Red Wing?

[A]

My dad was a financial advisor.

[B]

Okay.

[A]

But my mom grew up there, went to high school there, stayed there. I was born there, went to high school there. And so it was exactly what you just described. Most people stay.

[B]

So was it. Was it you or the fact that your dad was a financial advisor that you saw bigger and wanted to not just go work?

[A]

Both for sure. Like, they. They did a really good job with me and my two older brothers of, like, go see the world. Go travel. Like, my mom says, roots and wings. She's like, I help you get grounded and you be a good person, but then I want you to get wings and go fly and go do something else. Like, don't stay here. Yeah. You know, she would love to have me back and be closer. We have. My wife and I have a five month old.

[B]

You'll get her sooner than later. So how old are your parents?

[A]

My dad's 74. Okay, 71.

[B]

And they're not. And they're not doing the move to the closest grandchild thing.

[A]

Well, so I have two older brothers and they're back in Minnesota, so I'm the. Oh.

[B]

But yeah, see, my. My mom did the move to the youngest grandchild.

[A]

She calls me her baby boy. So maybe she'll still. Maybe come on down.

[B]

All you got to say is, this is so hard. We don't have enough help. We just don't have enough help. Can you help us? And she'll show up. She'll show up. So. But, but your parents were good examples, wanted you to get out of the house and do things.

[A]

Yep. And it's funny.

[B]

What advice would you give to like, okay, if you could go back right now to your high school friends and granted, if you're a high school person working at Red Wing, we're not hating on you at all. I'm just trying to say if you could go back and those people at their formidable ages and say, like, maybe there's more, what message would you give them?

[A]

I would tell. I mean, go travel, even. It doesn't have to be expensive or faint. Like, just go see other cities, other states, what the culture is like there. What else is out there. Because our parents being really intentional about summer trip or a spring break trip that wasn't. To the cabin in northern Wisconsin. That looks like more of Minnesota and more. Yeah. So, like, they were very good about, you know, experiences experiencing other cultures, places, things. And that really opened my eyes to, there is way more out here. And I tell those folks, like, don't take the trip to Wisconsin Dells to the indoor water park. Like, get in the car and drive to Austin, Texas.

[B]

Yeah.

[A]

Orlando or wherever it is to go just see other parts of the country.

[B]

Yeah. One of my favorite things has ever been said in this podcast room was my friend Chris Connell once said, I never met a well traveled racist. I love that quote. I thought it was so apropos. And we've done so. We've worked to get our kids out of the. Out of just seeing one thing over and over and over again. It's hard, though, when you have like, you know, we fell into the trap, but we have a second house at the beach in Newport. The kids are like, you know, oh, we Gotta go. You're going to Newport again? We're going to Newport again. So we try to mix it up as much as we can to get them out doing stuff.

[A]

Got it?

[B]

Yeah. Because I agree. They don't want to see the same things over and over.

[A]

No. And it's like the things that you are going through a 16 year old's head. I mean mine was. I like basketball. I don't like the winter or like the cold. I'm gonna go to college in the south that has a good basketball program. Not to play, but just.

[B]

Well, wake. You did it. Yeah. There you go. That's a good choice.

[A]

It's so crazy how kind of like malleable.

[B]

Can I ask a question?

[A]

We are at that age.

[B]

Did you apply to Duke as well?

[A]

I did and I got waitlisted.

[B]

You got waitlisted. Okay. Everyone said, hell with Duke. Screw you, Mike. Whatever. Oh yeah, screw you. I'm not doing it, buddy. So. Okay. I had to.

[A]

I love how you.

[B]

I had to ask. Well, you said, I want to go to a place in the south with great basketball and you went to Wake Forest.

[A]

Yeah, I had Villanova. Vanderbilt. I wanted smaller too. So like Duke. Check that box. Wait. Because I don't know, going from a town of 15,000 people to a school of 15,000 kids felt.

[B]

Yeah.

[A]

Terrifying.

[B]

Well then, dude, how are you going to get a Vanderbilt? It's right in the middle of Nashville. Yeah, that would have been. I mean it would have been awesome. Don't get me wrong. My kids applying to. What's one of the schools he's applying to right now is Vandy. So yeah, it would have been awesome.

[A]

It was like, oh, basketball. I can get over the size. I wasn't like terrified of big cities, but I was like, no New York, no Chicago. I just, I couldn't.

[B]

Didn't want to do it. All right, so cool. So hey, so we get to school. We're doing well in school or were you doing well in school?

[A]

Yeah, so I actually went to a boarding school my junior and senior year of high school because I went to my parents my freshman year of high school and said they were asking, why don't you have homework very often? Well, they're teaching like 20 minutes and then the other 20 minutes, like, do your homework. Like, well, shouldn't the other 20 minutes be teaching? I was like, yeah, I think so too. And yeah, I feel like this isn't good. I remember going to my parents. Like, I don't. The rest of the world probably isn't doing This. I know other kids are doing AP classes and all this stuff, and I'm not doing. I don't think that's good for me if I want to have this life that I want to have. So I approached them when I was 14 and said I need to go to another school, and Red Wing only has one option.

[B]

Yeah, well, they're. And they're literally training 60 to 70% of the workforce at Red Wing Shoes. So how much time do you need to spend on AP calculus?

[A]

Right.

[B]

Not a lot of.

[A]

So I went to a boarding school, and that really changed everything because it was Red Wing that had predominantly just white people, farm type, Red Wing shoe type, to the school that had people from all over the world, a lot of Asian international students. And so I went from being. It's kind of like big fish in a small pond to I'm now the only white kid in my math classes. And these again, most of the Asian kids kicking my ass.

[B]

They're killing you.

[A]

It was.

[B]

Where was the school?

[A]

It was in Minnesota, so It's called Shattuck St. Mary's okay. They've produced more D1 hockey players than any other school in the country. Wow. I know. I got the hair.

[B]

You have hockey flow, too. That. It could be hockey flow, too. I didn't think about that. Man.

[A]

In my graduating class was 104 of us, and I think 70 some went Division 1 in hockey or soccer.

[B]

Wow.

[A]

I was not one of them.

[B]

You know, I would have been one of them either. Yeah.

[A]

So. Yeah, So I did well in school, and I was going to let the college I got into dictate what I did, because I was really interested in going into the medical field pre med, But I also was very interested in business. My dad, you know, growing up, worked with a lot of entrepreneurs. He was entrepreneurial himself. I was like, all right, if I get into Duke, I'm going pre med, and if I get into Wake, because those are the top two. I narrowed it down to. Wake has a top ten undergrad business program. All right, If I get into wake, I'm going business. If I get into Duke, I'm going pre med. So if I didn't get waitlisted, probably wouldn't be sitting here.

[B]

Yeah, you'd be a doctor, which would. Yeah. Okay. Come on. Yeah. You wouldn't have as much money probably. But, yeah, depending on what kind of doctor you would.

[A]

I want to do radiology. And they're getting cooked right now. Yeah, that'd be bad charts.

[B]

Yeah. If you're going to Be a doctor, just go right to plastic surgery and just move to Beverly Hills. Just do that. You work my buddy, Dr. J. Calvert there and there you go. That's all you need to do. So when you were in at Wake, did you, were you in a position where you didn't have to work or what was your, what was your financial?

[A]

Yeah, my parents were like, no tattoos, no piercings. If you do that, whatever school you get into will help financially and take care of you guys. Good move and a few other rules and things growing up but. So I thankfully didn't have to work. But my dad was like, I worked three jobs and walked up way to uphill both ways. And so he wanted us to have a job. He's like, you don't need to do it, but you need to have something where you're, you're making money for.

[B]

You can't do nothing.

[A]

Yeah, you can't do nothing. And so I worked for this student run laundry business called Wake Wash as a bag runner. Initially I was running in, grabbing people's dirty clothes, putting them in my 2006 Jeep Liberty and driving them off campus to the laundromats. And the guys that ran it were graduating. I was like, this is incredible. This could work at Duke, Chapel Hill, Vanderbilt, I want to buy it. And they're like, all right, we're going to sell it for $28,000. My jaw hit the floor like this is the most money I have ever heard of. I have two grand saved up. I wasn't in the business school yet because you had to do two years of general. So I went to the business school as an 18 year old, started knocking on finance professors doors. I want to buy this business. I don't know how to, I have no idea how do I do it. And they're teaching me about discounted cash flow analysis, seller financing. As an 18 year old I'm getting this like very hands on, tangible learning. And that's when a light bulb went off for me is like, I don't need to go do this path that I feel like you're partially my family, but mostly society is kind of pushed on me of like get good grades in high school. So you get into a college and then you get good grades there. So you get your Fortune 500 job and do that for 40 years and then you die. I was like this whole entrepreneurial, I'm learning way more, I'm enjoying it. I would have ownership, I would have say in control over what I'm doing. But I'd just Be learning so much faster. So I ended up buying the business with two partners. We pulled together 11 grand and then did seller financing.

[B]

Okay, so your partners. So I want to walk through this because you're an 18 year old kid, which is cool, right? Were they just equity partners or do they bring something to the business?

[A]

So there were four of us, there ended up being three. So I learned early on about picking the right partners. Not just because they're convenient. I'd rather work with three very different people instead of three of me. And so one of the two of those guys were, you know, another me. And one of them wasn't and another one wasn't.

[B]

So what did you bring to the table? See, this is, this is gold, what he's saying right now. Because so many people want to bring on a partner when they start a business. A, because they're chicken to do it themselves. B, because they just think it'll be fun with their friends. But most of your friends are replications of you.

[A]

Yep.

[B]

And if you have three people that are all putting input into a business and they all think the same way, two of them are not necessary.

[A]

Yep.

[B]

So what did you bring to the table? What was your like. Let's talk about the SOPs. Let's talk about what you, what your area responsibilities were. What did you bring the table, what they bring to the table.

[A]

So mine was like the finance strategy, putting the deal together and then like big partnership, sales type of, type of things. My other partner was also finance entrepreneurial. Those dad was an entrepreneur, one was really good at marketing and then one was an anthropology major.

[B]

Perfect. Because that, because that's what you need in this laundry. That's exactly what.

[A]

He's the one that didn't make it out with us.

[B]

Really? That's shocking to me. Yes. How does this affect ancient cultures? I'm not sure. Let's talk about it.

[A]

We're all still, the four of us are all really good friends. We just realized we don't need four of us.

[B]

And I can just see those meetings when you're like, here's my input. Yeah, that's really cool. Here's my input. Yeah, that's really cool. Here's my input. Yeah, that's really cool. The third person's like, should we get pizza?

[A]

Lots of drinks for has.

[B]

Yeah, let's. I'll get us another round. There we go. So, okay, so before you bought it, you got rid of the fourth or.

[A]

Honestly, right around the time we were buying it. Because the issue was the people we were buying it from didn't have a formal agreement with the university. And so the fourth one couldn't get his head wrapped around, like, why don't we just do this ourselves and not have to buy it from them? And we're like, they have a brand. They do have a relationship with university. It's goodwill and it's intangible. And I get that you're buying this intangible thing, but the price was good. We knew we were gonna unlock a bunch of revenue, and he just couldn't get his head wrapped around that. So we're like, look, this is causing too much stress and friction, I think, for you. Let's. Let's give you the money back that you put into. And then some. Are you good? And he's like, yeah, I'm good. I don't really know why I'm doing this to begin with.

[B]

So. So you're learning from the professors how to value the business, and you're going through it after you. So after you recast their P. Ls, which I'm sure you did.

[A]

Yep.

[B]

What was the multiple you bought the business at?

[A]

Ended up buying it for, like, one and a half times revenue.

[B]

Okay. Times revenue.

[A]

Yep.

[B]

Okay.

[A]

All right.

[B]

So one and a half times revenue. Service business. Okay. It's fair. And you said you did seller financing. What were the terms on the financing?

[A]

So we did 11 grand down, and then we ended up paying them a percentage of revenue over the following two years that we ran it.

[B]

Okay. For a total purchase price of the 28 G's. Did you stick on that? They just were like, it's going to be 28 grand.

[A]

Yep.

[B]

Okay, so 28 grand.

[A]

They wanted to uncap it, but we knew and we did do what we were. What I'm about to say is we were going to get a really formal relationship with the university where we were getting real estate on the incoming, you know, parents website booth at orientation, and we ended up 8xing revenue. So had we uncapped it.

[B]

Yeah.

[A]

Not capped it. They would have gotten a really, really good outcome. And so thankfully, we capped. And he said, hey, you're looking for 28 or so we capped it. I think it was like maybe 30, 31. Low 30s.

[B]

Well, okay, let's. Well, lessons learned from that little transaction is, is you've got a distressed seller, they're graduating, the business either gets sold or it dies.

[A]

Yep.

[B]

Were there other suitors at all for this?

[A]

There was one other one.

[B]

One of the suitors. Okay, so you were competing with somebody else.

[A]

Yep. And that's where our anthropology guy almost blew up the deal. And we're like, hey, we had to, like, go have a midnight. Hey, we're so sorry. He didn't mean what he was saying.

[B]

Yeah, like, like, you saw the. You saw where this could go, and.

[A]

And it was very close. Close to going to go to the other group.

[B]

Oh, wow.

[A]

Because we, like, we had the offer we had nailed down. They wanted to go with us. And then the anthropology guy went and said, like a com. We were all in the same fraternity, too, so.

[B]

What fraternity?

[A]

Sigma PI.

[B]

Okay.

[A]

So he. He had said something. I don't. I don't think it's worth this. Why are we paying you guys all this money for this thing? That's not worth that. Of course they like, well, we'll just go to the other group.

[B]

Oh, I got back. Yeah. If you don't think it's worth it, we have somebody else that does. So you said you had 11 grand. Was that all personal savings between the three of you, or did you actually raise capital?

[A]

That was personal savings. I had like 2400 bucks or something saved up. The other one had three or four. The other one had two or three.

[B]

How'd you split equity?

[A]

One of them was going to be studying abroad for a year. And so part of it was the capital we put in, but also figuring out who was willing to do the most work on it.

[B]

Okay, cool.

[A]

And so I was willing to do way more work. So I ended up owning a little bit more because I was. I was effectively running it the following years. Put the deal together, structured it.

[B]

Okay, so, okay, let's talk about this, because now this is interesting. Did you value your time with your partners once the deal got moving? So did you start taking a salary?

[A]

It didn't take a salary. We were paying ourselves dividends, and we paid it out based on the total percent of ownership that we'd agreed to based on capital putting in and time that you were going to be.

[B]

If you could have gone back and revised that, would you. No, no, this is. Okay. Remove yourself from your buddies and remove yourself from the situation. Right. I'm just. We're trying to help somebody else is what we're doing right now. We're not trying to. I'm not trying to hammer you down what it could have, should have wrote. I'm saying let's help the next, next people, because I think this is something that people don't. Don't do right here. And you get into it with the best intention with people, especially partners. Everybody's Day one, everybody's best intentioned.

[A]

Yeah.

[B]

Oh my God, I'm totally going to. Yes, I can put forth effort. I'm going to do this. Yes, I'm going to do this. And then life happens.

[A]

Yep.

[B]

Right. Maybe all of a sudden they start not doing so on school and they're like, shit, I got to study. Yeah, I can't do this. Maybe they get married randomly at 20 years old and have a kid. Oh, shit, I got that. Like things happened pretty rapidly with people and you don't realize that. So was there a mechanism within your partnership agreement to adjust that or to compensate for that?

[A]

No, no. In hindsight, I mean we were, I think looking on Google or like, I don't even know if the, I can't remember if the university, one of the finance professors gave us a template or something, but it was very basic. I think our math was like, all right, I'm willing to work 10 hours a week on I'm willing to work five. And we just did like a prorated, you know, amount of that to figure out the sweat equity piece, cash piece and combine the two and that was it.

[B]

So was it pretty. Did it stay pretty close to what you had estimated?

[A]

Yeah, it was, it stayed pretty close. The fourth guy that we bought out, you know, we just ended up splitting his pro pro rata, which at the time didn't even know what that meant. And what is pro rata? So we're figuring things out, just going.

[B]

To whack up this piece of the pie amongst ourselves. That's what we're going to do.

[A]

Well, can you imagine a bunch of 18 year olds talking about, oh, you're pro rata. Share and distribution of this guy's equity.

[B]

Is just any today. Yes, I can. Yes, I absolutely.

[A]

Yeah, that's fair. That's a good point.

[B]

Yes, I absolutely. I mean, dude, yeah. The knowledge that's out there, these kids are getting now at such a young age and the information they have access to, like you had to go hawk a professor.

[A]

Now they go to chat, bro, you.

[B]

Go chat and pull this out in two seconds.

[A]

Yeah, right.

[B]

It's crazy. The education, the level you can get. And again, if you're listening to this and you're like, oh, I'm a kid or oh, I'm too old or whatever. No, you're not. Like technology has leveled the playing field amongst age, among starting line, amongst all, all that stuff. Like you, you can get whatever information you need is readily available everywhere. Yeah, okay, so you start going, you8x this thing.

[A]

Yep.

[B]

And when do you start thinking about maybe we should put this somewhere else?

[A]

Immediately. Like when we bought it, we're like, we want to go to other colleges. We first, we figured it out on campus for like a year, got our bearings.

[B]

How much money is this making?

[A]

Our first year, they gave us that. The real estate. They gave us the booth. We were like the shamwow in late night infomercial people. Like, parents were coming and they loved us. We're like, step right up. We are the premier laundry.

[B]

Laundry.

[A]

And that was funny.

[B]

You want your kid to stink because you know he's not going to do.

[A]

His own laundry, stuff like that in front of the kid, in front of their parents.

[B]

He's not going to do it. He's never lived on his own.

[A]

We show pictures of the laundry rooms at the, at the, at the, in the dorms. Like, yeah, look, people take your stuff out and they put it on the ground. They get detergent all over. And they're like, oh my God, this is like Beirut.

[B]

This is terrible.

[A]

Well, and they're in the mindset of like wallets open right now. They're buying books, they're buying meal plans, they're buying parking.

[B]

Oh, that's not what they're. But no, that's not. But that's not what you were selling.

[A]

We were selling out of time. Peace of mind. But like, they were. You were.

[B]

What you were selling is one of the last things the, the mom or whichever parent in the household has been helping take care of their kid. That last thing they could do to take care of them again, make sure they were still taking care of them. They can't do it physically. And I know moms are like, I started making my kids in alarm at 13. Yeah, but you were still taking care of your kid. And this is a way that the emotional piece of dropping your kid off.

[A]

Take a load off.

[B]

Genius. But it's genius because it's super emotional for the, at least one of the parents. The dad's probably like, God, good, you know, go do something smart. But the mom is just, you know, besides herself. And you're like, we're going to take care of your baby boy or whatever it is. I mean, yeah, it's genius. So we, right then and there is where you need to sell it.

[A]

It was just like, I couldn't believe how much revenue we did those two weeks. It was, you know, a couple hundred thousand dollars in a two week period of orientation. Wow. Up from 28ish thousand in. Yeah, sorry, it was 20ish thousand that they were doing. Unbelievable.

[B]

Did you ever have conversations with the guy you bought it from that were like, holy. What?

[A]

Not really. Because they had left, and we were like, this is.

[B]

They left and it's our thing.

[A]

Good to be like, they were your fraternity, I thought.

[B]

Right.

[A]

So they graduated, though. So this was our first year after they were seniors.

[B]

Yeah. What I'm saying is, but they had to have come back to school at some point and seen, like.

[A]

So they knew, but we weren't like, hey, guess what?

[B]

Yeah, we're killing you. No, because I'm thinking. Because here's the honest truth, right? If they graduated and they went off and took jobs, there's a good chance you're probably making more than they're making their first job.

[A]

Because the margins were unbelievable.

[B]

Right. Taking over their original business.

[A]

So they. I kept in touch with some of them because they went on to go DO Finance at G1 of, okay, that's a good job. In San Francisco. He's been at a bunch of amazing startups in the Valley. It's like, I'll keep in touch with them here and there. And, like, they've now known what's happening. They saw me do. I did after college with it. And, yeah, you know, they're really. They're really happy to see that. It's changed hands to seven student groups since.

[B]

So you're still. So you traded the business off?

[A]

Yeah, we sold it when we graduated.

[B]

Okay, so you guys had it and then sold it when you graduated?

[A]

Yep.

[B]

And it's continued to trade hands as it goes.

[A]

Six different generations of students.

[B]

Wow.

[A]

There's been this element of, like, this really emotional piece for all of us of, like, it changed my life. My eyes got wide open to being an entrepreneur running a business. Failing. Like, where else in your life are you taught that? Hey, it's. There's a lot of learning and good in failure versus school. It's so like a, A, a, B. That's bad. You fail. Like, it's punishing almost. Whereas this was like, oh, we now know one way not to do. Let's try this angle. Let's try this messaging. Let's try. And it's, like, exciting to fail almost.

[B]

Yeah.

[A]

You don't want to fail too much in a row.

[B]

But yeah, like, my office, I talk about all the time. You know, people have, like, their awards and stuff in their office. My office is filled with, like, it's like a serial killer to my own finances. I have, like, trophies.

[A]

Graveyard.

[B]

Oh, I have trophies of miserable. Just of lessons I learned from these things. I have a hundred thousand dollar bottle of vitamins. I have. I just. All this stuff in my office. You're like, what is this? You're like, yeah, let me tell you what that is. You're like, oh God, yeah, we'll do that again. Right. I think it's. I think remembering your failures is far more important than celebrating your wins. Because people that tend to, to cling to their wins too much coast. And there's only one way to coast and that's downhill.

[A]

Yep.

[B]

You know, when you look at those failures, you're like, man, I got to, you know, it fires me up to get away from that stuff. I love talking about that.

[A]

So, I mean, so that we had that experience at a really young age and all of us felt some responsibility, like we need to give another group the same experience that we had because again, it materially changed the trajectory of our lives.

[B]

Did you learn, did you learn more from the business than you did from the classes?

[A]

Thousand percent. And I say that all the time. That has nothing to do with the quality of the professors, of the people. They're like, they were amazing professors, ex Wall street guys, teaching finance. I mean it was amazing. But nothing will replicate that. Hands on down and dirty, failing, iterating, moving quick, problem solving, someone calling out while you're in a class and you're like, I need to staff this and figure this out. And like I just. Nothing replicates being in it.

[B]

It's interesting because I talk about all the time, you know, there's, there's these people that do what I do. You know, I love entrepreneur stuff and have a microphone in front of them and talk about how college is, is a rip off. And I'm not one of those guys. I do not talk about that. Like my son is applying right now to all the Ivies and you know, the second tier, Duke is on that list, which is funny, not right, but we're on that list. Vandy's on that list on the second tier. I'm trying to get him to go to a place for this reason.

[A]

Right.

[B]

So I'm like, listen, if we don't, if we get an Ivy, great, we're doing Ivy. But if we don't, I want you to pick a school that has, is a feeder school to prep to pri, to family offices. Let's go to smu, let's go to usc. Let's go to one of these schools where all the family offices come out of. Because for me, yes, the education is wonderful and the accomplishment of the degree Is fine. But it's the network that you build at these locations that is worth its weight in gold. And for you, when I look at you like and you telling your story, if you didn't weren't in the fraternity with these guys that had this business and you didn't have your buddies from the fraternity as a business, you never would have had this business which ended up teaching you far more than the university did. So you are a walking, talking example of exactly why I see incredible value.

[A]

In going to college 100%. And I tell people too, like you go to college to learn how to learn as well as the network, then learning how to learn, forget what it is you're learning, but it teaches you all this independence and how to get organized and study and pick up concepts and problem solve. And that on an was on another level for me than it was high school, even that boarding school, just college teaches you how to grasp kind of more foreign abstract concepts in a way that I think is hard to do in other settings.

[B]

Yeah, teaches how to think. So when did you start franchising to other schools with this laundry deal?

[A]

So we my junior year, me and one of the guys and we were like the most gung ho about this. Like we're going to laundry forever. We're going to take this to 300 universities. And we had all these models that in hindsight, modeling models, Nonsensical. Yeah, models are usually going to be wrong and optimistic. And these were very optimistic. We're going to get to 500 schools. We're going to get this many students at each school. Like there was logic behind it. But in hindsight it's funny to think about, yeah, we're going to do like $150 million a year college laundry business.

[B]

That's what we're doing.

[A]

But as our junior year we started going to other colleges and we learned very quick and very hard that government and universities have a lot of red tape and bureaucracy. And Wake loved us doing it on Wake's campus because it's a marketing thing for them. Look what our kids are doing. It's a state run business. We have entrepreneurs here. As soon as we went to Duke Chapel Hill they're like, who are you guys? Fill out this request for a proposal and you're going to have three other bids you're going to be up against and you can't have access to the dorms. And honestly we don't even really want you here because it doesn't really add much value for us as dean of residence. Life and housing, it's a liability. Like, what if someone gets assaulted or things get stolen? They have no reason to put their neck out to let this college laundry thing. So then we're like, all right, this is a problem. It's not a no. It's a no for now. How do we get around this?

[B]

We need a JV with a student.

[A]

Yes. We're like, we're going to make them, like, be entrepreneurial. And so then we had all these students wanting to do that, and the university still was like, we don't know, like, who are you guys? We want them to do it, but who are you guys involved? And what if you take advantage of our students? Like, all these no's and reasons. So we eventually thought, this is like an uphill battle. Let's. Let's sell it. When we graduate, you want to go do investment banking. I want to go do management consulting for a little bit, get a taste of that. And we had a really good offer to sell it for basically 9, 8, 9x what we bought it for. And as a college kid, as a 22 year old, we can retire, though.

[B]

Yeah, yeah. I got some of those checks in my younger years, and I was like, I'll be rich forever. And like, two months later, you're like, what happened to that money?

[A]

Oh, I went to buy a condo, right?

[B]

That's what I did. I went to South Beach. That's what happened. Damn it. So, yeah, that's what happened. So you left the entrepreneurial world to then go be an employee?

[A]

Yep.

[B]

So sucked. Okay, listen, anybody that makes anybody that is a great entrepreneur, I find that we all have one thing in common, which is we are chronically unemployable. We're just. We're the worst and most miserable employees on the planet. I. Listen, I'll take this moment to say, Jeff, I'm room service manager at the Ramada in Tallahassee. Super sorry to you, dude, that I was miserable to you. I mean, probably you're the ones that stand out the most. Yeah. Poor Jeff, the AM Room service manager at the moment and in Tallahassee, Florida. Really feel bad for that guy. I put him through the ringer. It was not easy dealing with me. Brent Rittersdorf, Hooters America. Dude, I'm sorry I gave you so much grief. It was ridiculous.

[A]

What did you do? It was the worst thing you did.

[B]

Just being. Just being me, I think was the worst thing. Because here's the deal. Because, you know, when you are an entrepreneur, I think your toxic trait is you're always looking for ways to improve on everything. It's just, you can't. It's a switch you cannot turn off. And when you are not the person that has any power or authority to improve things or make things better or change things, you can come off as condescending, you can come off as ungrateful. You can come off as always there's a problem, always this blah, blah. But in reality, I think you're really. You just want to see things improve. Like, hey, why don't we. But, but I think before you go through the process of being an upture, you don't know how to vocalize those things. So it comes off like, why do we do it this way? This is dumb, right? Is how it comes off. Instead of, hey, I've really looked at this. I think, I think maybe this will make us more efficient and make you look better in the process. As the person steering the show, like.

[A]

The political polish was, yeah, there's no political policy.

[B]

It's like, this is dumb. I don't want to do this anymore. Why do we have to do this? Why can't we just. It's like, it's terrible.

[A]

Even me just now is like, yeah, it sucked. Like, I just. What's the least amount of words I can say to some of how I felt?

[B]

It's a three word description.

[A]

The reality is it was awesome. I did learn a lot. The people I worked with were amazing. Some of the best people I've ever worked with. It just wasn't the right thing for me to do. For all the reasons you mentioned, I was always a go, go, go. There's all this waste everywhere. And I hated the waste.

[B]

Crazy.

[A]

I couldn't stand the waste. I remember two of the reasons I ended up leaving. One, I just, I knew I need to do something entrepreneurial. But the second one was I've always been like a systems, you know, kind of thinker of like, how do I do gamify this so I can do the least amount of work but get the most upside.

[B]

Yeah.

[A]

And if as soon as there's diminishing returns, if I work another hour, but I don't gain anything, like, why would I do that hour? Just I could go do something else. And so I. They give us the rubric. Here's how you get a one star, two star, three star, four star, five stars. All right, five stars. Only 3% or, you know, each class gets it. Here's the rules. They lay it out. The rules of the game. I was like, I'm gonna go Play this game at the end of the year. And my roommates, I'd be. You bought a condo with the laundry money. A lot of guys that lived with me worked at Ernst and Young were people I knew from, from college or work. And at the end of the year, my utilization and consulting. We do utilization. How many hours are you working? You know, client work, et cetera, et cetera. My utilization was like right at 41 hours a week. Like literally the bare, bare minimum. My roommates was at like 80. He's working twice as many hours as.

[B]

You were getting twice the production.

[A]

So I was getting, I think twice. Just I was doing campus recruiting. I was talking to the right partners and being involved in the right extracurricular things within Ernst and Young. And Sam, my roommate, very smart kid, also went to wake. I think he's smarter than me in a lot of ways. He worked harder than me on paper. Years up, he gets a three, which is where you want to be. That's three is what they expect out of you is what most people get. Two is you got to work on some stuff. Four is top 10% and five is top 3%. He gets a three, good. He's kind of where he wants to be or needed to be. I get a five and I'm like, I did half the work. I need to get out of here. Like I don't want the rest of my life to be me thinking about how I escape working because I don't, you know, like I wanted to, but.

[B]

I, but, but I love that you skipped over it so quickly, so casually. And so many people don't understand the concept of diminishing returns. They don't understand like water boils at 212. If you heat it up to 280, you just wasted it. If you're trying to boil water right. And people don't think about it in those terms. And one of the things that I think keeps people trapped is they don't audit their time. They don't audit the effectiveness of what they're doing. They don't look at, you know, for lack of a better phrase, the KPIs of everything they do. They don't understand how much does move the needle. And I think with me, when, when I was. Because I haphazardly just like just swung through my 20s on a hope and a dream. And I didn't have any great success until my early 30s. And because of this, which is why I wrote my book, which is a playbook to my dipshit 20 year old self. But when you really start looking at what moves the needle here, like, what do I need to do that really moves the needle and just focusing on. If you just focus on 80% of your time, on the things that give you 70% of your results, you're going to get a 5. While your roommate, who's just trying to hit every mark with equal energy, gets a 3. And not understand how he got there. Right. So, yeah, I think understanding that is so important in the aspect of anything you're doing.

[A]

Everything's kind of this game or this system. If you break it down and you take even an hour and just proactively think about what your day looks like, what your week looks like, and you'll be shocked.

[B]

So how old were you when you read Tim Ferriss's Four Hour Work Week?

[A]

I think it was right out of college.

[B]

Yeah, that book changed your life.

[A]

Yeah, yeah.

[B]

When you read. If you haven't read that book, number one, buy my book, available by the time you hear this, it's available everywhere. Amazon, Barnes and Nobles, all that stuff. But yeah, another great book is Tim's book, Foreign Work Week, because it talks. It literally will teach you this concept of understanding diminishing returns, which so many people do not.

[A]

Some of these are the things that I think should be taught in high school, in college of basic budgeting and how to buy a house and taxes.

[B]

And, you know, don't get me started there because, I mean, you figure, you know, the school system the way it is now is really developed. What? When in Rockefeller days where you were trying to really just develop a workforce? Not so much your next thinking generation, just you're teaching to work. Go to. Go to work here and get done at this time is really the number one lesson we're trying to teach people then.

[A]

Seriously? Yeah, seriously. Yeah.

[B]

And to walk on girders and build New York City or whatever they were doing like 80 stories up.

[A]

Seen those old videos of like, like physical education class or like gym class and like the third, like, everyone was bring it back.

[B]

That I'm for. I'm for. I'm for that, right, dude climbing the rope. And that's. That's my honest. That's why those videos, I think, are why Robert Kennedy got made the health secretary or whatever. Because, dude, that dude's. He's still ripped and he's like 70 or whatever it is. God bless. Yeah, Bring that back.

[A]

Yeah, I don't hate that.

[B]

I don't hate that at all.

[A]

Regulate the food we're eating too.

[B]

Yeah, yeah, I Got a problem. I'm gonna make a video as soon as we're done here. Cause my book actually. If you're hearing this now, my book actually comes out tomorrow. And I just found out this morning there's another big drop happening tomorrow as well, which is McDonald's is bringing the McRib back. So as soon as we're done here, I'm gonna go shoot a video where I compare for people that are on the fence. Right. What? You should buy my new book or the McRib. And I think I've got some really good things that are gonna break. I think my book's gonna win when I really lay the comparison all the way out.

[A]

But, you know, they do pork prices are low, right?

[B]

I know, but I got to compete with it. I got to compete with the McRib tomorrow. Come on, man. I got enough problems. I got to deal with this miserable, miserable problems I have. Anyway, so back to what we were, wherever we were talking about. Oh, so you're miserable at your job.

[A]

Yeah.

[B]

You're learning a lot. But deep down, because you have not for me, the soul of an entrepreneur. It's not for you. Right. So when do you decide to jump out on that? On the next adventure?

[A]

So I. I felt like we had left meat on the bone at the laundry thing in college. It's like, we got a couple no's, but what if we tried commercial laundry or residential, like busy families and this other customer subset? And so I tried. I made the mistake almost again that I made in college, where I tried to work on this with other consultants from Ernst and Young. More of me. This is where I really. It really stuck with me this time. I was like, I don't need more of me. I need someone who aligns with me on my values. And I think my beliefs in life broadly, but from a skill set has completely different, completely complementary skills. So we had tried at another school. We got a couple no's. Those no's turned them off, like, oh, it's not gonna work. They said like, two no's. I was like, come on. Really?

[B]

That's it?

[A]

We're gonna get like, 100 no's. Come on, 100 no's before, you know, morbid.

[B]

At this point, that's what you need.

[A]

So I tried it a little bit out of ey. But then I kept seeing all these Uber for X businesses pop up. This was when Instacart Ship for grocery delivery, Wag Rover for dog walking, Postmates Doordash for food delivery, Drizzly for alcohol. Like, Someone is like, we're in the era of the convenience economy. Someone is going to do this for laundry and dry cleaning, and I'm going to hate myself if it's not me. I did this in college. I got the drive to do it. I'm young. I don't have any major responsibilities. Like I need to get after this. And so what I did instead was I called someone who I knew had my beliefs, you know, deep trust with them. One of my childhood best friends. But the difference was he's very good at marketing, sales. I'm better at like operations finance. I can sell if I have to, but I better at like putting models together.

[B]

Building your coo, not cmo.

[A]

Yeah. And so I was like, you want to do this? And we started tinkering on the website. We started getting customers unintentionally in Charlotte, like, all right, starting to work here a little bit. So he moved down, quit his job, broke up with his girlfriend at the time, broke the lease on his apartment. He's now married and has a kid with her and everything's great. But at the time, did you get.

[B]

To get invited the wedding after you almost ruined her entire life? Did you get. You had a bit of a wedding. When I bring this up, I can imagine. I can imagine she would. Yeah, I can imagine she would.

[A]

So he moved down and we, we got after we had five guys living in a three bedroom. My place, three bedroom condo. It was my mattress. Dan's next doors. And then we have this other friend that we kind of. We say we saved a little bit. I mean, he grew up in good family, but comes from a family of alcoholics and like kind of wasn't going anywhere in small town. He was one of those guys that was going to stay in Red Wing.

[B]

Yeah.

[A]

Forever. And we're like, we're going to start this thing. Come down. He's. He's one of the hardest workers I know, is very good with hourly employees and like frontline operations. So he came down as our first driver. He eventually managed five laundromat locations for us and 80 person team. And so that's something that always personally.

[B]

So you had the app on the front end. Did you start acquiring brick and mortar Laundromats to do the actual stuff?

[A]

Eventually. So we were early days doing the laundry in our apartment at first, doing the delivery in our own vehicles. Some of the stories and things we saw. And yeah, we get out of our apartment at first, outgrew that quickly started going to Laundromats and said, hey, we're going to, you know, John, we're going to bring you thousands of pounds a week. They all laughed at. We were, keep in mind, we're 23, 24 years old at the time. We're like, we're bringing thousands of pounds a week. We did this in college.

[B]

We want to discount.

[A]

Right. And they were like, yeah, sure, I'll give you this discount if you can hit this tier. We blew through the tier in like two and a half weeks. And they were, how are you doing? I've been running this laundromat for 10 years. I have no delivery business. No walk in. How are you doing this? They. We eventually outgrew them. They couldn't handle the scale that we were bringing them because laundromats are typically semi absentee. Not that many employees.

[B]

Yeah.

[A]

They now needed 5, 10, 15, 20 employees to handle the volume we were bringing. And they're not operators. They're more landlords, I'd say, than.

[B]

So were they doing the wash, rinse, fold for you?

[A]

Yes, we were.

[B]

So you were arbitraging this deal?

[A]

Yes.

[B]

Okay, let's talk about that.

[A]

And that's what we did in college, too.

[B]

All right, let's. Okay. So it was our arbitrage. So we didn't talk about that. So if you're listening to this, you don't know what this is. It's literally one of my favorite words in the entire world, which is arbitrage, A, because it sounds fun, but B, because of what it is. Essentially, you're taking a service or you're charging a fee, and then you're turning around and hiring somebody else to do it for less. And you're making the difference between what your customer's paying you and for what you're actually paying to do the work and finance. I love this because you can go borrow money at a certain rate and then you can loan it at a much higher rate, which is something I do with great frequency. Buying notes and you just make the spread is essentially what you're doing is. My point is, in my opinion, the greatest thing about America is arbitrage. I love it.

[A]

So, yeah, examples of it everywhere.

[B]

Everywhere. It enables you to start a business without starting a business, which is great. And so many people that are good at a particular service or have a service, like you just said, might be terrible marketers. They might be terrible at driving sales. And you can go into those businesses and partner with them on these margins because they're like, what do we have to lose? We're just here getting business which is great. And you can take a step further, which we do. I. This is. I do. Which is very good. And I've been criticized by some for the. What I call it. I call it the Tony Soprano method, because I call it that even though it is good for everyone, it's not that bad. But what I'll do is if I think I can drive our customer base to an auxiliary or a vertical or something we don't currently do, you. I'll go find somebody that's really good at it who might not be the best. Might not have the best sales. And I'm like, okay, cool. We want to start sending all of our clients to you if you can handle it and you do a good job. And they do. And we start testing it, and if it goes well, we start sending more and more clients at them. More and more clients at that. More and more clients at them. And I have these conversations every so often. We're like, how much of our business is your. How much of our business is your business? Oh, it's like 20% of my business is your business. How much? Oh, it's like 35% of our business. And as soon as that number tips over 50%, well, now we're going to be partners.

[A]

Yeah.

[B]

So I'm like, okay, here's the deal. We're going to get in. Now. I know that this is a viable business. We've tested the market. Market response is great. We can make this profitable. We're going to be your new partner, or we're just going to go open our own and take our clients somewhere else. At which point they're like, okay, cool, because. And here's again. This is where. Yes, it is a. It is a lever technique to get business done. I understand that. But it is also good for them because once we are now officially their partners, we wind up driving much, much.

[A]

Yeah.

[B]

So every single person that I have ever done this with is in a much better place today than they were.

[A]

Bigger.

[B]

Much bigger. Much bigger pie than they were the day we found them. So. But we've been able to do that with just about any vertical that you can imagine. That has to do with real estate, which is great. And I love that you did this as well. So at some point that you're outgrowing the laundry people.

[A]

Yep.

[B]

Do you. Do you just buy them out? Do you become partners in their existing business? What do you do?

[A]

So we had this weird. I mean, we're at this point probably 24, 25. Business is starting to hum in Charlotte we're probably not bankable yet because none of us, we have some assets but the businesses venture back. We'd raise some venture capital for it. A lot of the money that we were making was going right back into technology, scaling new products, new markets.

[B]

You jumped over that. I want to come back to it. We'll keep talking.

[A]

So we had this kind of in between tweener moment where we couldn't go build a half a million million dollar laundromat. We just didn't want to use venture capital that way for a, a non scale asset like a Laundromat.

[B]

Yeah. And so you're raising money at this point though?

[A]

Yep.

[B]

What were the terms you're giving on your money?

[A]

So we raised 400 grand in our first round at a two and a half million dollar valuation. Okay. And we were doing 20k a month, 30k a month in revenue.

[B]

Okay. Okay.

[A]

In hindsight probably would have gone for a higher valuation.

[B]

Yeah, yeah.

[A]

We, there was a lot of learning that happened in that whole phase too of just venturing.

[B]

I was going to say that seems a little light with the margins you were running.

[A]

Yeah. So yeah, definitely have learned a lot. I've now raised collectively 40, 43 million. I know a lot more about venture deals and how to structure things and had really good mentors early on that give us advice on what to look out for, liquidation preferences and participating non preferred equity and all this stuff that goes into it. So we had this, this tweener stage where we couldn't buy a laundromat yet, but we needed something because we were outgrowing the quality of which the laundromat partners could provide. So we started moonlighting, hiring our own staff to go into other people's laundromats when they weren't busy because you were.

[B]

Just renting them off hours.

[A]

Yeah. And they loved it. They're like, yeah, now I don't have to do anything and I'm generating revenue that I would have never had otherwise. Because you're bringing a customer base that would never step foot into a laundromat. It's mostly affluent dual income households.

[B]

And now you're running. So you're running, you're not competing with them because like they said, they're never step foot in. You're running the graveyard shift. I'm assuming is when you're graveyard.

[A]

But then also Monday through Friday, they people who are using a laundromat, they're working jobs, you know, so they're not doing laundry at 11am on a Tuesday morning. For the most part. And so we had some off hours in the day, but mostly at night after 9, 10pm so graveyard.

[B]

And were those all in leases you were doing at this point?

[A]

Yeah, so we would pay, you know, basically rent. You know, we'd rent out space. It was an asset utilization play, though. Yeah, they've got assets that aren't being used. We can produce, produce goods and services out of them. We did that for eight months, and it allowed us to really perfect our process of how do we hire people, train them, build technology around tracking. Like, we were tracking everyone's garments and scanning machines and measuring everything and getting everyone very efficient. We actually, you know, we realized turnover is a huge issue for a lot of retail businesses. We're like, all right, what does this group of people, you know, want? What excites them? What motivates them? People, oh, pizza party. This. I was like, they don't care about that. Like, everyone does this. They try these things at something like, oh, pizza.

[B]

The pizza party.

[A]

Everyone tries that.

[B]

That.

[A]

And I just asked him, like, what do you want? Like, I want to make more money. And, like, honestly, this. This is a hard job. You stand, you fold close for six to eight hours. I would love to be able to get in and out of here if I can produce quality work, just get paid more and get out of here faster. It's like, we should do that. Why don't we pay you a variable base? All this technology tracks everything. So we can see John's producing 28 pounds an hour folding, but then there's a QA check that they're incentivized on something else. And so if you went too fast, you'd get reworked, slow you down, you make less money. And we'd show it real time on a leaderboard. Here's Alex, here's John, here's Susie, here's. It was unbelievable. Everyone was making more money, and we were way more efficient as a business. Or a cost of goods sold went way, you know, way down.

[B]

What would you say the impact was on that model of the leaderboard?

[A]

Everything. Gamification, like, was everything. Everything. Like, getting to see it. And it was. We'd put TVs up.

[B]

Yeah.

[A]

We'd install TVs in these places with.

[B]

The raspberry PI, have all that.

[A]

It's game changing, Game changing. It doesn't matter if you're a white collar, blue collar. Like, if you can see, everyone likes.

[B]

People want to compete.

[A]

Performance and competition and a friend.

[B]

They like friendly competition. They don't necessarily like, like, brutal like, first place, you know, bottom two are El Torino steak knives. Third place is you're fired. They don't like that.

[A]

But.

[B]

But yeah, same thing.

[A]

So that, that tweener stage really allowed us to perfect the operation. Training, hiring, technology we built. And then it was, all right, it's go time. We need to go get into our own space. And we had two early investors that really believed in us. And, you know, they were like, look, we'll pg. We'll personally guarantee us going to go get our own spot. And then Electrolux came in. Huge appliance manufacturer. They own brands like Frigidaire. Yeah, they loved what we were doing. Like, look, we'll be the bank. We'll back you guys. We don't typically do this, but you have two and a half million of pickup and delivery volume that you're going to bring to this location day one. There is almost zero risk of you not paying us.

[B]

Wow.

[A]

So let's go do.

[B]

So they banked and financed all your machines.

[A]

Yeah. And some of the build out, which they would never do, is because of how much volume we had. And they, they looked at this as if we do right by them now and this works, they're going to grow. They're going to go open hundreds of these. And we want Electrolux equipment into these locations, not anyone else. So we ended up buying. You'll appreciate this as a, as a real estate guy, I know you do more than that, but.

[B]

My heart, that's where I'm at. It's fine. I'm not offended by that.

[A]

We. Our first real estate deal for that laundromat was with McDonald's corporate IT. So I'm 25, negotiating with Chicago, McDonald's Chicago office on. And I got fleeced, of course.

[B]

Oh, my gosh.

[A]

Can't put a restaurant into our spot for 20 years.

[B]

Yeah, yeah, okay.

[A]

And again, we had good, good, good mentors and support along the way. One of our, one of the guys that was personally guaranteeing the, you know, some of the debt was started fast Med Urgent Care, one of the largest standalone urgent care businesses in the country. So he had done 400 different commercials.

[B]

Yeah, he's got it.

[A]

So he's like, all right. So he. They didn't know that he was doing this. So they were like, who is this kid? Sorry. Asking.

[B]

You're okay.

[A]

Asking some of these terms and these things. It was an awesome experience. They were. They literally just moved across the street because the light rail got put in. It was blocking their visibility. So they didn't want to sell to another restaurant. Even though it's perfectly designed and laid out and built for a restaurant. So had the ampage we needed, the water lines we needed because it was a restaurant.

[B]

Oh right, yeah.

[A]

And we built a 6,500 square foot. Most laundromats are 2,535.

[B]

Giant facility.

[A]

Huge facility that we had open seven days a week to the public. But same thing with that kind of arbitrage or asset utilization. Monday through Friday, the store's not as busy. We'd shut down these roll up doors and we'd reserve that almost for like a production style facility or manufacturing line. On the weekends when laundromats are busy, we'd open the roll up doors and let the public use the whole thing. Wow.

[B]

And how many of these. So okay, here we are. Fast forward. How many of these did you build?

[A]

So we are up to 40. 43 of them.

[B]

43 of these, yep. And so this is going well. You still own this, right?

[A]

So I'm on the board. I hired a CEO about a year and a half ago. Corporate stores are doing really well. Some of our franchise early franchise stores, there's a lot of learnings and those aren't doing as well. Then the next wave of franchise locations are doing a lot better.

[B]

Well, I want to get it just because our time's going to run short. This has been fascinating talk. Let's talk about Franzi because I know that's. That's the new. That's the new love.

[A]

Yep.

[B]

So let's talk about it.

[A]

So I. About a year and a half ago, or honestly as soon as we started franchising, I'll give you the quick fill in. When we started opening these laundromats like this is working. We need hundreds of them, but they're not cheap. All this equipment build out, etc. Plus the operation was. Is complex. There's a lot of people. Even with the gamification, the tools, it's a lot of people. And, and how we're going to do this in Seattle and Austin. And so we've been approached to franchise a number of times. We always had said no. And when Covid happened, it gave us this once in a lifetime opportunity to really, hey, if we could stop everything and start over, what would we do differently? Because Covid gave a lot of people.

[B]

That was that reset.

[A]

Yeah. And so we said, well, we need a ton of laundromats. We'd like to have the labor risk on someone else's plate or some of it on someone else's Plate. Well, why don't we franchise? It solves both of these issues. Other people come in with their capital, we give them a playbook, Revenue delivery, volume, equipment, discounts, you name all the stuff that franchising brings. They bring capital to open stores, they handle some of the labor, we handle the delivery piece. Win, win, win, win, win. So we started franchising in 2021. We sold 118 locations in 14 months. Got a crash course on franchising and all the things that go into a franchise disclosure document, FTD and then also selling them. I learned a lot. A lot of brands work with what are called FSOs, franchise sales organizations, and they work with business brokers or franchise brokers. We did about half of our deals organically because we were good on social and content. The other half though, we were using brokers of some sort and we were paying them 60 commissions on the franchise fee. Wow. And I was like, why? Okay, maybe they have some access to a network of people and whatever.

[B]

Yeah.

[A]

The more we got into, it's like they're doing, they're doing work and some of them are really good, but I don't know about 60 worth. And why is this happening? I start talking to more and more brands, they're all upset about it. We don't know what else to do. Because if you think about it, most franchisors, they started John and Alex's gym or coffee shop and they're not like venture backed, like tech entrepreneur types. They're not, they're thinking like, how do I get more coffee beans cheaper and training manuals and like that's what they're focused on. They're not thinking about selling to sophisticated franchisees and putting all this stuff together. So they work with brokers as like a means to an end out of necessity. But they hate it. Everyone hates this. It's a huge pain point. Hugely expensive. My thought is, could we do what Zillow did to the residential real estate buying process where there's education, they democratize access to data. I don't need to have an MLS or real estate license to go access home information anymore. Can we do the same thing for franchising where we get every franchise you can possibly imagine in one spot, what it's going to cost to get into, what the royalties are, what, what the potential revenue is, what the consumer sentiment is in each region of the country, what competition looks like down the road from you, all the stuff that you need to make a sound, good decision that a broker should be doing. A good broker would be doing and send these leads to the brands for half the cost. So that's what we're doing. That's what Franzi is. Think of it as Zillow for buying and selling.

[B]

When did it launch?

[A]

February of this year.

[B]

So you just got it up. So how. So what's your adoption rate? How's it going? Is your, is your model performing?

[A]

Yes. Okay. Yes. We've.

[B]

So we've gotten better than we did, but we were sitting the dorm room.

[A]

Yes, a lot better. I got a phenomenal team. Like, people have same values but different skill sets. I learned from that lesson. Yeah, Capital Raise was amazing. Really good terms, really good partner. Didn't give up too much of the company to do it.

[B]

Let me ask you this, because you're talking about that and I always say this, which is the hardest thing for most entrepreneurs to go to do, is give up control of certain tasks. And the way that I have reconciled with it is this is. I go, okay, if what they do is 80% as good as what I would do, I'm okay with it. Because. Because. But here's the reality. You ready? So people listen to that. Like they hear that, they go, man, that's really egotistical. This dude thinks he's better. Everybody. No, because if it's 80%, if it's 80%, in my opinion, as good as I would have done in reality, it's probably 120%. It's probably that much better than what I would have done because I just.

[A]

The 8.

[B]

The 20% margin is my ego.

[A]

Yep.

[B]

And so that's where I'm like, okay, so if I just get that. So did you struggle with that at first?

[A]

Now I can delegate.

[B]

Yeah, let's go.

[A]

I don't care a mother.

[B]

Yeah, let's go. Take it all. I don't care.

[A]

Please take more.

[B]

Yeah, I think I probably say anymore. I don't care more than anything else because I just, I've just decided that I don't need to have an opinion on every little thing.

[A]

Yeah, Like, I don't care.

[B]

I like, you're smart. I pay you to be smart. I heard you. Because you're smart. Just go do it.

[A]

Hopefully incentives are aligned and like, yeah.

[B]

Just go do it. If you're the right people, it's easy to do. So what's the long term, like? You're on, you're on target with your, with your model right now. What's the long term vision? How much, how much money did you raise for, for friends?

[A]

We raised three and a Half million.

[B]

Three and a half million. And where was your tech? So your tech team, obviously, is pretty heavy.

[A]

Where's your tec was the main investment, and then go to market shortly after. So, like getting Franzi out there, it's a marketplace. Marketplaces are notoriously hard because you got to get that flywheel going. You got to become the place, you know, you don't want to spend your time on. Franzi, we don't have any good businesses or good data, so you have to go get that first, build all that out. And same thing, the brands don't want to be listed or, you know, participating in the marketplace. We don't have good leads.

[B]

So are you. And I'm curious, just because it's the buzzword and everybody talks about it when they come through, but what are you doing? Or what is the plan? Or have you thought about how you're going to implement AI into this business.

[A]

To make it better it, like all AI. So we have 4,000 brands on the platform, 4,000 franchise brands. We scraped 26,000, what are called FDD, franchise disclosure documents. It's like a sim, like a. Yeah.

[B]

I know it is.

[A]

So you've got audited financials, all this stuff. We indexed every word, every.

[B]

The most. It's the most expensive part of becoming a franchise.

[A]

Yes. There's useful information. So we pulled 26,000 of those. We have trend data across the 4,000 brands over multiple years. You can see stores opening, closing, which is a good indicator of the health of the system. Then we're also pulling in census data, Bureau of Labor Statistics data. All these. All these data points have this massive data set now. So then when John comes through, we're asking you, what's your risk tolerance? What's your financial readiness? What's your opera like? What are you good at? What are you not good at? What are you good at but don't enjoy doing and don't want to do more of? What is your goals? This is a family legacy. Is this an intellectual, stimulating challenge for you? Is it to make money? Because everyone's got, honestly, a slightly different reason. People ask me like, well, what's the one that just makes the most money? Isn't it the one everyone wants to buy? I'm like, no, honestly, no, it's not.

[B]

No.

[A]

And so we take all that and then that's where the AI.

[B]

What, you like plunging toilets?

[A]

Yeah, yeah, exactly.

[B]

Yeah.

[A]

But that's where the AI comes in, is a human being couldn't look you in the face and say, I know all 4,000 of these brands and I'll help you find the right one for you. Yeah, there's no way navigate the sea of that. AI pairs it down to John's top five.

[B]

So when you say you got 4,000 brands on there, have they all agreed to it or are you just kind of pulling their information? And then as you get leads, you're like, hey, knock knock, I have client for you. Or I can send it over here, the latter.

[A]

So we 4000 unverified, we got about 300 verified that have signed legal agreements, platform agreements with us. And to your point, whenever we get leads and like I want to talk to this brand, we go to brand. Hey, we have this amazing person, 2 million net worth. They're one of buying in markets. We know you have availability. You should sign the platform agreements free for you to do we reduce so much friction.

[B]

Well, you're going to, you're going to. Okay, so you're, if you haven't already, you're going to piss somebody off.

[A]

Yeah, probably.

[B]

Okay, so because you're going to have somebody's data on your site that is not complimentary to what they are proportional what they're pitching.

[A]

We did have one guy say, hey, take all that stuff down and we'll, we'll do it. But it's also public information and we want people to be able to look at their brand. Still.

[B]

Does that hurt the integrity of the site though? If you're not like, if it's right and you. If this year, like this is right, shouldn't you be.

[A]

We will remove almost as a warning label, not public. They're like, hey, how did you get this? This should, this isn't anywhere. This isn't out there in the world and it shouldn't be. We'll respect some of those requests. But then we still leave the logo and, and here's the, here's the, this.

[B]

Is how many stores closed last year? Because I think that's the metric that would probably bother or, or ruffle the feathers of enough people.

[A]

Yep. And our, our response is like, this is how capitalism should work, is you should run a really good business. And if you do that, people want to buy into it, shouldn't try to hide. You shouldn't tell us to take it out. Like the whole point of this is to make transparency in this otherwise very opaque market. That's a problem. People are making huge life decisions or investing. Some people are doing Rob's, you know, Rob's rollover is you can borrow, you can take retirement assets tax free, no penalty. To buy franchise businesses. I think independent businesses.

[B]

Oh, self directed. Self directed. Roth ira. You can do that.

[A]

Self directed or like a company 401k. You can pull money penalty free to buy a franchise business. It's called a Rob's rollover.

[B]

I had no idea.

[A]

It's a, I didn't know until franchising. It's, it's. I kind of like it. The government's like if you can invest your hard earned retirement money into a corporation that might my tank and why can't you invest in yourself?

[B]

Yourself? That's America, buddy. That's America.

[A]

They let you do it.

[B]

I love that.

[A]

So people are doing that. They're taking half of their retirement savings and they're buying a business but with incomplete information or the brokers they don't realize are being paid 60% on the back end because there's no. Unlike real estate. You don't have to get a state license, you don't have to take coursework, you don't have to do continuing education. You and I are business brokers right now, at this moment. Yeah, right now you're.

[B]

I, I can't, not so much me, I'm a licensee so I can't. I leave that one on. We don't do, we don't do business brokerage here at all. And for the very reason of. They always end up in lawsuits when you, I mean so many, so many businesses get traded and exist in the lawsuits because the books are always cooked and everybody's always puffing and then it's always a mess. So the ad backs and I don't need this trouble. I don't need the problems. All right, well dude, if they want to find you, how do they find you?

[A]

Yep. Go to franzi.com f r a N Z Y. This is all free for you. As someone exploring business ownership, we do get paid by brands, by lenders, et cetera. But it's a flat success fee across all brands so we have no incentive to promote one over the other. So more of a fiduciary. So it's free for you. You get all these resources, you get all this AI tooling, get access to lending and coaching there and you get free one on one coaching. If you want, we have folks on our team that are franchisees that will walk you through how they did it themselves, what to look out for, what things to look out for in brands, how to negotiate with brands, how to, to finance the deal, et cetera.

[B]

That's amazing.

[A]

All this free to you and then follow me on LinkedIn, Instagram, all the other stuff. It's Alex from, from Franzi.

[B]

I love that dude. That's awesome. Well, thanks for coming. Listen man, that was a pot. If you didn't get any out of that, there's something wrong with you today, I got to tell you. I mean, doesn't matter how old you are, doesn't matter what your education level is, doesn't matter where you are. Build a good network that provides opportunities and then sees those network, sees those opportunities go out and chase your dreams because something is simple and stupid as doing students laundry can turn into a massive, massive business. We'll see you next week. What's up everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escaping the drift.com you can join our mailing list. But do me a favor, if you wouldn't mind, throw up that five star review. Give us a share. Do something, man. We're here for you. Hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.