← Making It with Jon Davids
Making It with Jon Davids
208 - "I was a painter in college. Last year we did $100M." | Jeff Dudan, CEO of Homefront Brands
00:43:52
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- [00:00]
A
This guy started a painting company in college and made over $70,000 in profit. Then he built a huge home services company and sold that for millions. He's got another company now, and yes, it's doing pretty well. Already past $100 million in revenue. I'm talking about Jeff Duden, CEO of Homefront Brands. Jeff is a beast. And he's here with me today to talk humble beginnings, building big businesses, and all the crazy lessons he's learned on the way. That's coming up in just a sec. Welcome to the podcast. My name is John Davids, but y' all can call me J.D. i'm the CEO of Inflowicity, and on this show I like to share the stories of some of my favorite businesses and the people behind them. If that's your thing, hit that subscribe button. Wherever you're listening, leave me a review and share this episode with a friend. That's how we get this show to grow. Get my best stuff to your inbox@johndavids.com and now let's. Let's get to the show. You're listening to Making it with John Davids.
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B
So, Jeff, you start painting in the early 90s, you start a business, and eventually you go and sell that business for a whole lot of money.
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A
Can you just kind of take me.
- [01:16]
B
Through your entrepreneurial journey from starting to sale?
- [01:20]
C
Yeah, sure, John. So I've, I've often said business owners are sometimes screwed into existence, and I certainly was because I was broke. And so I was in college. I was on a football scholarship at Appalachian State University and really didn't have any means of support outside of that. So I had worked the trades in Chicago growing up. I talked my roommate into starting a painting business because he had a truck and I knew how to paint. And we ended up winning the contracts to do student housing apartments in Boone, North Carolina. And in a three and a half week time period, my partner and I split about $76,000 in profits in $1990 over the summer. And, yeah, we'd paint 15 to 20 apartments in a day. We used all the athletes that were there taking classes over the summer. And, you know, they had a real problem because they had hundreds of apartments that they were turning and then they had these painters coming down from the mountains who weren't really motivated by time and hustle. So, so we really solved the problem for them. And, you know, my next best job offer was to be a football coach at the University of South Carolina for 12, five a year. So I'm like, I made I made three times that in three weeks. And I just, I put my stake in the ground and named myself, declared myself an entrepreneur.
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B
Okay. Most people, when they tell me the story of their very first side hustle, it's a whole lot of. We had a business plan and then we tried doing this and then that didn't work. You did 76 grand in three and half weeks.
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C
Yeah. And that was profit. I mean, that was what we split. So, you know, we would, we would get paid. I mean, we started painting houses and we did some jobs at the country club and we did some jobs for the football office employees and things like that. But then we met the property managers at the end of that first summer that managed all the student housing apartments, which, you know, as a university, I think at the time maybe 13,000 students, it's really probably doubled more than that today. But yeah, there was a lot of apartments that needed to be painted. And it was a week and a half period at the end of May, and then another week and a half period at the end of July. And of course I was playing football. So starting the first of August, I had to show up for camp. So that worked well into our schedule. My roommate was a football player as well, so. And we just used all the athletes that were there over the summer. And basketball players can cut in ceilings without a ladder, which is awesome. And you know, wrestlers on the base moldings just scooting around and, and we built these, went to the shop, we built these huge 24 inch rollers and pans and we would just, I mean we would, we would paint apartments fast. And it was, it was a proving ground. It was, it was a lot of fun. It was a great time.
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B
You solved the labor problem pretty quickly because you had all these athletes and they're super tall athletes, so you save on ladders. So that, that's, that's cool.
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A
How did you actually get customers?
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B
I mean, were you knocking on doors? Were you talking to friends?
- [04:08]
C
We somehow, you know, I'll tell you what, it was referral marketing. We were buying our paint at a Sherwin Williams paint store and there was a manager there named John. And we would, you know, we just. You go show up at the paint store, you, that you drink their coffee and you chit chat with them. And they saw us and they'd say, what, what are you working on? And we needed to lean into them because we were relatively new in business. So how do we do this? Do we do we buy a sprayer? Do we do all these things? And then they just made an introduction because they probably got a call from one of the property managers who is the largest one, and they just said, you should go talk to these people. So it was simply an introduction from a Sherwood Williams paint store manager.
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B
And then how did you figure out the economics? Because what the interesting part is you just said you made $76,000 in profit. How did you know how to price it, what your materials would cost, such that at the end of the day you'd have a profit.
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C
That was easy. They said this is what these pay and we're going to, we're going to, we're going to buy the paint. And you were going to pay you $200 for a two bedroom and $240 I think for a three bedroom and then like 310 for a four bedroom or whatever it was. So I mean, based on those prices, I mean we were doing, you know, 20 apartments in a day and you know, just racking up the dollars.
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B
Wow. And so why did you ever stop painting? Why don't you just do that for the rest of your life?
- [05:36]
C
You know, it's interesting. I, I thought about it. My girlfri time, who's currently my wife, was still there taking classes. She was a couple years younger than me. And we, you know, I, I, I got a call, I didn't know what my path was going to be and where I wanted to live. But I got a call from a buddy and he said, hey, Hurricane Andrew just hit South Florida. This was 1992 and we need help down here. I know you guys have a business up there, why don't you come down and help us? So we went down there in our little four cylinder Dodge Ram pickup truck with the wooden ladder rack that we had constructed out of pressure treated wood. And we cut our teeth in the insurance restoration business for the next 18 months. And then in 1994 I started the business that I would grow and sell some 25 years later called Advantaclean.
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B
So you said you cut your teeth in the insurance restoration business for 18 months. Just unpack that. What does that mean? And is there a lot of money there?
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C
There, there, there is and there was a lot at the time. They've certainly meaning they, meaning the insurance companies have improved their controls over time, but it was disaster response. So Hurricane Andrew was the largest disaster, the largest hurricane to make landfall in the United States up until that point in time. It came in through Homestead, Florida, which is all the way down at the tip and really all the way up through Fort Lauderdale And Hollandale and those places maintain severe, severe, severe damage. So there was, I mean just miles and miles, hundreds of square miles of damaged roof, damaged commercial buildings and all of that. So very profitable. Doing demolition, roof tarping, drying services, demolding services, you know, all of those things. And then also the subsequent reconstruction. So we went down there and we started, we landed some of our old own projects, but then we threw in with a company. Florida has a licensing requirement that was kind of hard to solve for. So we threw in with, with a large restoration general contractor and basically cut our teeth. And you know, how do insurance companies handle claims? How do you sell to a homeowners association? We were doing mid rise, 17 story buildings, 19 story buildings, 250 unit apartment or condominium complexes. So we really cut our teeth in like just the gauntlet of insurance restoration and remediation and reconstruction. So with that I ended up with three business partners and myself and we moved up to Central Florida in 1994, started a business that would become Advanticlean one day and then I would sell in 2019 with 240 locations in 37 states. And in 1995 I moved back up to the Carolinas to get married, start a family and run our second office location.
- [08:25]
A
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B
Was the business plan on day one for Advantaclean? You had already done 18 months of work. Was it just a continuation of that or was it something new?
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C
Yeah, we had a business plan actually and it was, we had fallen into government contracting. So at the time there was a savings and loan collapse in the late 80s and the early 90s. And as a result of that, the government ended up with a lot of residential properties. So there was something called the Resolution Trust Corporation, which was responsible for upfitting thousands and thousands of properties around the country and a lot in Florida. So we won a contract with them to do all the rehabilitation to hundreds of these homes. And so we, we launched the company based on that. But the basic premise was we were going to be a fire, water mold, emergency services, disaster restoration contractors. So we would show up when on your worst day you had a flood, you had a fire. We would stabilize the property, mitigate the damages, work with the insurance company and the homeowner, and then do the reconstruction.
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B
And so how did that business evolve over time? I mean, is that what you did the whole time or did it, did you, did you realize other ways to make money and other other business opportunities?
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C
So we started as a traditional, what you would think maybe a serve pro or a service master or some of these other types of businesses that you see out there. And we certainly perform those services to the very end. But we did augment our services when we went to market with our franchise product, really in 2009, to be what we called, we tried to niche into something called light environmental services. So we did mold remediation. We did, we did commercial duct cleaning projects and residential, but duct cleaning projects. So those really were from indoor air quality problems or something that happened in water damage or a fire or something like that. We did emergency services, of course, the water damage services and things like that. And then we augmented the services with things like sealed crawl space systems, so waterproofing services and those types of things. So Advantaclean was really about if anything happened to a property that affected the indoor air quality or moisture got into the building and it needed to be remediated. That was when Advantaclean was called, if it affected the building or the occupant. So was, you know, we were like clean. Our tagline was clean, safe and healthy buildings, homes and businesses.
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B
And was it generally businesses and individuals paying you or was it insurance companies paying you?
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C
It was about half and half. And so we had services that we would bid with in the general marketplace for like sealed crawl space systems, air duct cleanings and things like that. Of course, when it was an emergency flood, something like that, typically there was insurance coverage. So we were insurance friendly, but we weren't insurance dependent. We wanted to make sure that we had service lines that fell outside of the insurance business to make sure that our franchise owners had a nice mix of complementary high margin services. So if you're doing a steel crawl space system, you're probably going to need to have the ducts cleaned. You might need a mold remediation. So we, we would get into projects where one or more of our services would be required and one of the services could be a lead in for the other services. So it was a nice little tight little bundle of services. Maybe we got a little bit cute because we didn't do as much of the reconstruction, but that's actually pretty large revenue things. And as a franchisor we got paid on the top line. So, you know. But what I was really concerned about was the health and wellness of our franchise owners. I wanted to keep them safe. I wanted to keep them doing high margin services that were complimentary. I wanted them doing things where we understood the customer acquisition model and then maybe not have to compete as hard with just being, you know, insurance reliant. I didn't want us to be, you know, just 100% one big customer because there's risk inside of that.
- [12:54]
B
Yeah, I've got so many questions about the franchise model. But just before we leave this, the, the pluses and minuses of having an insurance company as your, as the one paying you. I mean on one hand it's like if the, if it's the insurance company, you don't have to deal with price sensitive clients because it's just going to the insurance company. On the other hand you have no pricing negotiation power because they probably say, hey, this is what we pay for X and that's it. So is it a better business if you had to pick one versus the other? And I get you want to upsell, cross sell and all that, but is one better than the other in any particular way?
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C
Absolute power corrupts absolutely. And insurance companies have it. They've done a very good job at controlling the cost and they should because people see insurance and they think, oh, I'm just going to bill whatever I want to and they have to pay it. You know, an insurance company shouldn't do that. So they did a very good job at creating databases and creating programs. And there was a couple of third party administrators that emerged as a go between, between the insurance companies and the end user customers and then they would manage the contracting process. Right. So it wasn't the insurance company saying you have to use this contractor, it was a third party administrator saying these are our program contractors and they've agreed to work under a set of unified pricing. And so the insurance company doesn't have to worry that they're going to get gouged or they're going to get screwed. The contractor knew exactly what they were going to get paid and if they ran a good business they should be able to make money inside of that. And then the customer would end up with some sort of a guarantee that if you use one of our program contractors and anything goes wrong, we'll take care of it so and that held contractors accountable actually to, to do a good job, to follow up, to satisfy the customer. We wouldn't get paid generally there was, we had to jump through some hurdles and make sure people were satisfied before we got paid. Not a horrible system for controlling cost. The outside of it as you mentioned was is that you can't really negotiate for any greater margin. So a lot of times over the course of the decades that I was in the business, sometimes the insurance companies or the third party administrators would put too much downward price pressure on the pricing and you would end up, you know, I've always said if I'm going to be broke, I don't want to be tired too. You know, like you would end up doing all, you know, you're working 80 hours a week and you're trying to meet the program requirements to press the button and turn the estimate in and you know, do all that and you're not making the margin anymore. You agreed to the, to the pricing and they've, they've suppressed it now. So, so a lot of companies would then go outside of it. So you get these white hat or black hat type situations where some restoration contractors would only work for clients and wouldn't work for insurance companies. Then there's this whole thing of public adjusters which are basically attorneys or licensed adjusters that don't work for insurance companies. They work for clients and they would represent clients. So now you got into this battle of you know, they turn in a higher price, the insurance company wants to pay a lower price and, and all of that. But I mean I think all of that's healthy in a market where the, the demand is non discretionary. When your house floods, the insurance company owes the repairs and to mitigate the damages and if it's a covered loss, right. So you know there has to be this forced transaction and you can't let bad actors get inside of that and exploit it. So I think all in all kind of mostly the right things happened and but what I, what I wanted to do with our guys is, you know, what I tried to do was to create a niche and kind of rename it in called Light Environmental Services where we would do the water damage and the mitigation, but maybe we wouldn't do the construction which you would think that an insurance company would like that because if, if the, if the contractor who's going to do the repairs is doing the mitigation and the demolition, they might demolish more to get more work on the, on scope.
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B
Right.
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C
And so yeah, you Separate them.
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B
It's interesting. You, you, you sort of talked about a whole bunch of strategies here. And for the listener, we're talking about upselling and cross selling and labeling and positioning your business in a certain way to make it work for you. So in 1994 you start this business and in 2009 you get into the franchise model. So what happened in between 94 and 09 and then what made you get into the franchise model?
- [17:20]
C
We ran a direct business really up until 2004. And I had bought out my last partner. I bought out in 2004. Each of the three, three of my partners went at different times for different reasons. And we had become a big business. I mean, we were working in Hawaii, Canada, in the Caribbean. We responded to every disaster. We were significant government contractor. I had started the franchise program in 2000, but it was never getting focused for a couple of reasons. Number one, my partners were not aligned with it. They were kind of construction guys and they were very happy with the business as it was. It was a significant business. We were making a lot of money and they didn't want to risk that business in favor of a franchise business. Where I had started with the vision of being a franchisor and expanding this business nationally or even internationally, so, and so, and as the business, direct business was growing, that little franchise business that we started was getting no attention. So a lack of focus will always lead to a lack of greatness and a lack of results. And it was getting no focus. So I bought out my last partner in oh, four. We brought in some consultants and they came. One of the deliverables after six months was this purpose, vision, mission, values, document. And we, they implemented strategy. So the first time I was learning how to really turn strategy inside of a business. And part of it was that we were going to continue to build our direct business, which was our kind of romp and stomp. And we had, we had accounts for big box retailers like, you know, Best Buy and Baby Gap. We had, we worked in VA hospitals through the government. We worked in military bases. We did all this kind of crazy stuff. We had security clearances, we worked in hydroelectric dams and all kinds of very technical things. So as a result of that little plan, we bought tractor trailers, we bought thousands of pieces of drying equipment, we bought generators on wheels, we bought pickup trucks and put diesel tanks in the back. We bought a fleet of campers. And sure enough, that preparation met opportunity. And Hurricane Katrina struck the Gulf Coast. And down there with partners, we went and executed about $100 million worth of work over the next four years. I was driving back, I had set up that storm and I was driving back in the middle of the night from Gulfport, Mississippi to Charlotte because I was missing my son's first football season. And I had three kids at the time. And I hit this inflection point. And I know, John, you've had them, we've all had them. But you know, our business was growing. We were working all over the Caribbean, we were following, chasing these disasters. I had half a million dollar jobs going on in California and I was just on the road the whole time. And I decided that that's not what I wanted in life because I didn't want to be an absentee father. So in that moment, in like two in the morning, driving through Atlanta on my way to get back to Charlotte, I decided that I was going to sell all of our company stores under a franchise model and commit to that model so I could make people come to me instead of me having to go to the job. It was just that simple. Like that, like that whole pivot was based on that one pretense of that desire to align my life with this business. So we took a perfectly good $20 million business, basically threw it away in favor of a franchise model. And so in 2006, 7 and 8, I sold our locations in Orlando, Florida, Greenville, Spartanburg, South Carolina, Columbia and Charlotte. Under the franchise model. I had about four franchisees operating in 13 territories. We went to market in 2009 and think about what was happening in the country in 2009. It was after the great financial crisis. Everybody had lost their butt in real estate, the mortgage, all of this stuff had happened. And what was Advantaclain, it was non discretionary third party payer insurance companies. It was high margin needs based grudge services that nobody could not do. So we just got a Groundswell of ex CEOs and ex salespeople that had been displaced and lost their 401ks and turned them into 201ks in 2006, 7 and 8. And they were ready for like a good grunge, dirty, you know, kind of business that Warren. We actually did some franchise advertising, which I'm like, it's like the kind of business that Warren Buffett would invest in. Like, and I'm like okay, I get it, that's puffery. But some people are asking me if Warren Buffett's an investor in our business and it's. The answer is no. So but I mean, case in point, I mean that's. It was the Kind of stable business that was going to go on forever. And as a result of that, like our franchising exploded those first few years with really qualified franchisees, that's what we did. So I sold the company stores over that three years to pay for my franchising habit and launched the franchise company.
- [22:11]
B
And what was the downside? Because you alluded there a second ago to you took a perfectly good $20 million a year business and then you did something else to it.
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A
Was. Was there a downside?
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B
Like, could this have gone wrong? And if so, what would have gone wrong? If, let's say the 2009 thing hadn't happened and you didn't have this groundswell of support? What. What could have happened? In a worst case scenario, I'd be.
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C
Working for you right now, John. I'd be. I'd be running. I'd be running Facebook campaigns for.
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B
Would you?
- [22:39]
C
I don't know, dude.
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A
Like, no, no, I get that.
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B
But I guess what I'm asking is why did you need to do something so stark? I mean, could it have been that you actually tried it and then it just didn't work? You went back to the thing, or was it a. When you crossed the Rubicon, you're not going back.
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C
You know, one of the smartest people I ever hired was a building scientist. And he was responsible for standing up our call center. He's a big thinker. He was very smart. And after knowing me for about a year, he. He gave me the, the biggest compliment ever. He said, jeff, you are just too stupid to fail. And look, let's look at the tenets of that decision. Number one, we had a deep expertise in what we did. We were some of the best. Like we were. We would rappel down in, in hydroelectric dams. We worked in Navy deals, Navy SEAL diving tanks. We did hospital operating room remediation. Like, we were technically very good. We were good at contracting, we were good at working with universities and institutions. We were good residentially. So we had spent 15 years developing an expertise and a team of. Me, we had 44 trucks. I mean, we had a lot of people. We had huge relationships all over the country, not only with clients, but with subcontractors to do things right. So we had all of this stuff. And the only decision was that we weren't going to be doing it, that a franchisee was going to be doing it. And franchising is a business model. Is a proven business model. And franchising was very pervasive in the space. So to me, being too stupid to Fail. I looked at those three or four factors and said, certainly we can do this now. Was it harder? Did it take longer to do because I didn't go out and hire the right people? Did I get in our way? Did I, did it, did it take? Did I not get it right from the beginning? And then there was several times we had to reel back programs and roll programs out. Could we have done three or knowing what I know now, could we have done three or four or five times the revenue and had a three or four or five times bigger exit? All of that's true. But having the courage to succeed in that opportunity has given me the opportunities that I've had subsequent to it. Like you don't go from zero to hero. I mean, even if you look at Elon Musk or you look at Mark Cuban, like their first deals were smaller deals that they had success in. And by smaller, like PayPal being 350 million and he gets 100 million out of that, is that a small deal? Well, compared to what he's doing now, it is. So once, you know, one of my basic tenets in life is you've got to succeed in the opportunities that you're in to get the next win, the next opportunity. So if you want a bigger opportunity, you need to find something to succeed in. Today I didn't get a perfectly good four year degree in marketing, going to three schools over five and a half years because I was a genius and they just had to have me, right? So going from a student that basically, you know, passed high school, failed out of his first college, went to a juco, got a football scholarship to App State, then to a painting contractor, then to a restoration contractor, then to a government contractor and big and national international contractor, then to a franchisor, and then after that, in 2019 to now, I built, I mean, you know, over three years I've been involved in over 40 businesses. You know, I built a franchise sales organization, I built a franchise creation business, I built a national chain in fitness and also in health and wellness and being able to sell those businesses and, and now building one of the fastest growing property service franchise platforms in North America. I mean, in our second year of business we'll just, in our second year trading as we define it, we really started the business in 22. We're sitting here in 25, but this is our second year of trading with franchisees really out there and we'll do 100 to 125 million in sales. And you know, we have a clear path to half A billion dollars in sales in a few short years.
- [26:30]
A
Mm. I'm hungry. You guys hungry? I could go over some fried chicken right now from Joe Jollibee. And no, this is not a commercial for Jollibee. This is a commercial for Influicity. That's my marketing agency. And Jollibee is one of our amazing clients. You can see how we help drive more foot traffic to their restaurants across America. @influicity.com Check out the case study. And hey, while you're there, check out all the other case studies from the amazing clients we work with. Influencer marketing, podcasts, social media, content, AI and so much more. And if you want to work with us, just hit the let's talk button over at the top of the website. That's influicity.com and I'll see you there.
- [27:13]
B
So the, the idea of succeeding in the opportunity you're in and not looking at other opportunities, because when you look at other opportunities when you're not there, you kind of, you spin your wheels. You don't get anywhere. You've got to actually complete the step you're on before you get to the next level. And you got to remember that, as you said, you're playing the game you're in, you're not playing someone else's game. So 09 to 2019, you basically have this decade run of building this franchise business. You exit in 2019.
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A
Why did you exit?
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B
Why did you sell this thing?
- [27:44]
C
Look, this gets to the point of getting yourself in bigger rooms. Literally, I was the biggest impediment to growth of not only our direct business, but our franchise business. I look at, you know, I look at Belfor. They started the same time as us and you know, they grew to billions of dollars in the time that we grew to, you know, $100 billion. So you, you, you look at, at that and you say, all right, you know, you, you, you're growing that business and now you feel like you've taken the business as far as you can. You've been doing the same thing for 25 years. In 2009, I started getting into bigger rooms. I started with Vistage and I joined a Vistage group which was led by Dave Zerfoss, who was the president of Husqvarna North America, who grew them from 29 million to 530 million through dealership network. So for nine years, I had a coach that knew how to build a half a billion dollar business. And he helped me grow our franchise business. Then I got into ypo and, and and then I, and I'm going to this YPO thing and of course I'm highly intimidated with all of these other people, but I was the only one in there that hadn't sold a business. You know, it never crossed my mind that, you know, your businesses are there to grow healthy, incredible businesses help people help themselves. But it's someday you're there to exit that business. So, I mean, I'd been in AdvantiClean for 25 years. I was coming up on 50 years old and the market conditions were that private equity had gotten into franchising and had bought everything that wasn't nailed or screwed down to the floor. And honestly, we were one of the best looking companies that was left in the property service space. So we were getting inbounds and I took a couple of inbound conversations from some strategic platforms and, but thankfully, because I was in YPO and because I had smart people around me, I realized what the value of the business was. You know, not to be a stupid farmer. Right. I was, I used to, I did a lot of real estate and one of my business partners had just made a killing buying farmland around, in, around our area here in North Carolina. And he just looked at me one day, said, jeff, there's no more stupid farmers left. I mean, he would do a same day, same day flip and make $2 million. You know, he'd buy a farm one day and sell it to developer the next day and you'd make $2 million on this poor farmer. Right. There was a lot of stupid farmers out there that, you know, people bought low and were able to sell it high. But I was able to realize that it was, the timing was good, that I had taken the business to a certain level and that if I wanted to do something else, that I needed to finish this chapter, capitalize myself and then figure out what to do next. And I would have enough gas in the tank for maybe a 10 year run. And we sit here today, I'm 57.
- [30:37]
B
So when you sold the company in 2019, was that life changing money for you? It was, but you were already loaded, you were already making tons of money. So I mean, it was life changing money. But you, you mean it was life changing money in, in the business opportunities that opened up, not in your lifestyle.
- [30:53]
C
Yeah, we were comfortable. Yeah, our lifestyle didn't change much. I mean, we, we live in a different house now, but it's, you know, three miles from the other house. We did a lot of horses and stuff and you know, I was able to go out and, you know, get her the horse that she could win the world championship on. So, so, so look. But no, I mean, generally, lifestyle didn't change that much for us because we had done pretty much everything we wanted to do. We kind of had all of our buckets of assets and stuff sent up. So basically you just, you put the money across the buckets and then you get very disciplined about what you're going to do the rest of the way. And then you, you have the resources, if you choose to, to accelerate the growth of things, to hire better, better people. Because typically when you start a business right, you're like, all right, I'm starting this business and everything's on a shoestring. I'm wearing all the hats, I'm doing all the work. I'm getting a couple people, they're wearing a lot of hats and stuff like that. And the reason that we've been able to go out and buy five businesses for Homefront brands, five good franchise companies, and then hire the chief legal officer from ServiceMaster, an international guy that had run four multibillion dollar companies, you know, we, we went out and got the good brand presidents. There's the cash flow of the business wouldn't approach. But like, I knew what to build. So because I knew what to build and I had the capital and I didn't need to go to a bank and I didn't need partners. I could just decide. And look, at some point, you know, you, you're in two buckets when you've made money in life. You're like, I'm going to do everything I can to be tax efficient and leave this for my kids, which has a, which could ruin them. You know, I think, who was it? Like Bill Gates said, I'm going to leave 10 million bucks to my kids and that's it. You know, 75% of the world's billionaires are on the giving pledge to give away over 90% of what they got. Yeah, it's, it's the making it that was the fun part. It's, you know, but then they realize the power that comes with money and how it can ruin people. So, or you know, you, you, you run in a, you run in another thing where you, you do the skin methodologies, spend kids inheritance now. Right. So I, I know people that are in both buckets. They're like, I don't have any trusts. I just, I'm going to do what I'm going to do with it. I'm going to have a great life and the kids are going to get whatever they get. Or some people try to build like legacy and they create, you know, sophisticated instruments that will guarantee the preservation of the wealth and not hurt the kids and give them too much access and all of that. But at the end of the day, you know, you've never heard anybody on their deathbed say, oh I wish I had another 11%. They don't care, you know, I mean, you know, it doesn't matter, you know, at some point. So for me, I've got the opportunity to work with my brother. I've got the opportunity to work with great people. I've got the opportunity to work with great franchise owners and build great brands, five at a time. I got the opportunity to work with my son. So it created and, and you know, something meaningful for me to do and to try to do with excellence. Right. I mean to really to, to say, okay, I've learned, I've struggled for 25 years to get all of these scars and all of these lessons and all of these contacts. Okay, if we were going to do it the very best we possibly could by every measure, what would that, would you have the courage to write the check to do it? And that was the question we had to ask ourselves.
- [34:19]
A
Can you talk about like that?
- [34:21]
B
You're, you, you sort of threw out a bunch of stuff. You invested in 40 businesses. You mentioned a gym thing. You talked about something making $100 million in a second year. Give me some concrete. So like you, you, you have all this money 2019, what is your plan and what do you do over the next three months? Six months, one year, two years?
- [34:36]
C
Yeah, so I basically did the Steve Jobs thing where I just created four buckets. And you know, the four buckets were, you know, franchising, which was one thing and the other was, you know, non correlated investing. So I invested with Ben Carson Jr. Who's a great friend of mine and he was an investment banker and he had just acquired a business called Parking Management Company PMC. And we were the 13th largest parking management and valet business in the country at the time. So I made significant investments in that early and Covid hit and we happened to have recapped and had $13 million on the balance sheet and we went out and went acquisition crazy. We are now the number one parking management and valet business in the country. So yeah, so that one's, you know, that's a home run. So basically making some investments like that, I didn't operate inside of it, but you know, making some. So that, that's a bucket, right? Looking for good investments. You know, if I know what I should have done? Nothing. And put all my money in Nvidia, but who knew?
- [35:43]
B
But that wouldn't have been nearly as fun. It wouldn't have been a good story.
- [35:46]
C
I'd have been fine. I'd have been much more rested. So, but, and then there's another bucket called ip.
- [35:54]
B
Yeah.
- [35:54]
C
So my books, my friend Mastery, my franchisor education business, my speaking engagements, you know, the podcast, our unemployable podcast. So the, you know, all of the stuff that falls into IP around me and the things that I do. And then the fourth bucket's real estate. Because businesses and real estate are your two best hedges against inflation. I probably made more money in real estate on a per hour basis. And then you take your four buckets to where you're going to where you're going to live within these four buckets, and then you start to put some rules around it. So one of my rules is, is how much money do I demand to make an hour? So if you want to make $100 an hour, you want to make $200,000 a year, there's probably a million things you can do. If you want to make $500 an hour, man, there's probably 20,000 things you can do to make a million bucks. What if you want to make $5,000 an hour? What if you want to make $25,000 an hour? So basically now it's like, well, I can only invest this much time or, and I, and I calculate as what the business is going to sell for pre tax. So I say, all right, how much money am I going to make along the way? And then when the business sells. So if I, if I set my, if I set my requirement at $25,000 an hour, I can't get involved with anything that's going to be worth less than, less than $100 million. So you set your dollars per hour to manage your time and the things that you need to say no to inside of those buckets. So real estate is pretty easy because generally it's like if you're sourcing properties the right way and you're not doing the management well, you don't have a lot of time in that. And you know, so like, you can make a, a big return with very little time in real estate. I mean, other people are living in it, paying for it, doing whatever's happening with it, building smaller businesses that are super heavy with your involvement. Like, it's, it's, it's hard to make you know, a thousand or $5,000 an hour doing that, you know, so, so anyway, so those are some of the types of, of, of filters that I put around my decision making as to what I get involved. Involved with.
- [38:05]
B
And I want to just like, bring this home for everyone listening and tuning in here. We started this conversation talking about a kid playing football and going to Sherwin Williams and painting apartments, and now we're ending here with a guy who's making money on real estate and franchising and talking about, you know, making a killing on parking and all this kind of stuff. So when you look back at your journey, which you're still not done, you're still playing here. Look at your journey. Do you ever have pinch me moments.
- [38:32]
A
Or are there moments along the way.
- [38:33]
B
Where you kind of could see this.
- [38:35]
A
Happening, or were you surprised at every.
- [38:38]
B
Milestone along the way?
- [38:39]
C
This sounds so disingenuous, man. But, like, I just, I. I dwell on the mistakes and you don't need to. You know, I listened to the. The founder of Ritz Carlton talking, and he's being interviewed, and he said, they're like, isn't it too expensive to provide this customer service? They was getting challenged by this panel of, like, it costs so much to do what you do, and companies can't do it. He says, no, it doesn't. Everybody wants to be good. Everybody wants to be part of a winning team. Just focus on the things that make you stand out and that make you money, you know, so, like. But the other side of it is, is I know that if I would have made the. See, that's why I wrote my book Discernment the business athletes for a great life through better decisions. I can look back at my three decisions probably in my life that I made that I would have coasted to being a billionaire by now. And. And I'm not. Okay. And I might be, but I'm not. So. But like, I, I look at it and I'm just like, if I would have just seen that decision and it would have, and I was 100% in control to make the decision, how everybody would have just looked at me and nodded and said, okay, that's what we're doing. And it would have impacted my life. But for some reason, I didn't see it. I didn't have an. I didn't have that decision filter around to say, no, Jeff, you can't do this because, you know, it's not going to meet your dollar per hour thing or whatever. So. So your decision, there's nothing that will Impact the quality of your life and the velocity of your business more than your decisions. And I don't mean everyday decisions. I mean there's probably three or four big one year that if you miss them, you never get that time back. I just walked into here, I was doing some coaching on one of our franchise businesses and I brought in the original founder and I'm working on our sales plan and performance coaching. And I just realized that I could have seen this two years ago. And I walked in here and I turned around to Jen and I said, you know, I just realized we just wasted two years of development of the markets that are ultimately going to matter in this business. And I could have seen it two years ago, you know, and it's stuff like that that you just miss, you know, so, so yeah, I mean, like that's when you, when you say, do I ever have pinch me moments? I mean, you know, not, not really. I just, I just want to, I just want to, I want to perform for all the people that matter. I want to perform for our franchisees. I want, I want excellence to be, you know, I want to be.
- [41:09]
A
I.
- [41:09]
C
Want to be, you know, at least associated with some level of excellence, some level of humility and of, you know, impact in the world. And I want to finish impeccably. But I'm not tied up on a dollar amount. That's the other thing is too, like, I'm not really. What I learned when the most, the most important thing I learned when I sold my business in 2019 is that at my core, I'm not financially motivated. It's not my love language, which is one of the reasons why I haven't been a better entrepreneur. Because I don't need to win every dollar at all costs if it's going to be at the disadvantage of a better overall solution or maybe to the mutual advantage of us and somebody else. Really, you know, hard business owners that like, depending on whether you. Now I will tell you franchising requires relationship equity and it's as relational as it is transactional. But if you're in a straight transactional business, buying and selling stuff where the relationship doesn't matter, you need to be hard, right? And you need to win, win, win, win, win. Because compound interest is on every dollar you make.
- [42:21]
B
You say that and I agree with you, especially in a long term franchise marriage type relationship, you got to be more careful there. But I would say that in general it's a good way to go about business to get to have a reputation as someone who, who's okay keeping 49 and giving away 51% because at the end of the day, it's a small world. Your, your reputation follows you wherever you go. And, and it's just a better way to live life, in my opinion.
- [42:46]
C
Well, I think if it, if it's aligned with who you are and, you know, I mean, like, how much money is enough money and is it does, you know, if you have an extra 11% but you left a trail of bodies along the way, I don't think it's worth it. You know, I just don't, I just don't think it's. Everybody hates me, but I got that extra 11% and, you know, I got the, I got the extra eight feet on the yacht.
- [43:09]
A
Jeff, thank you for joining me today. Amazing story and thank you all for tuning in. Get my best stuff to your inbox@johndavids.com.
- [43:17]
B
I'll talk to you next time.
- [43:20]
A
This episode is brought to you by my AI Growth Cheat Sheet, available now at johndavids.com AI if you're a business owner and you're wondering how to use AI to actually grow your business, this is the answer. It's a fully custom AI growth cheat sheet that'll give you the tools you need to grow your business today, available right now@johndavids.com AI just answer a few questions, wait a few seconds, and you'll have your list of tools. And it's free. Get it right now@johndavids.com AI.