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School of Hard Knocks Podcast
Vic Keller | Sold 9 Companies Including 3 to Berkshire Hathaway on Building Durable Businesses, Partnerships, and Wealth
00:59:20
Vic Keller founded 17 companies and exited 9 of them, including three sales to Berkshire Hathaway. He breaks down how growing up blue collar shaped his edge, why getting punched in the mouth early almost killed his first business, and how rebuilding i...
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- [00:00]
James
You've sold nine companies, three of those to Berkshire Hathaway.
- [00:03]
Vic Keller
I never built any of my early companies with the mindset of selling them. The strategy was, how could we build businesses that provide just amazing value to our customers? I was 23, 24 years old when I started my first business, and I ended up getting my first ever business partner, and he was a multi billionaire.
- [00:19]
James
How did you attach yourself to a multi billionaire in your early 20s?
- [00:23]
Vic Keller
So I'll tell you a fun story, and this is just absolutely crazy to me.
- [00:27]
Jack
The common theme here from the beginning of the podcast has been all about.
- [00:31]
Vic Keller
You hear the term boring business, you hear AI, you hear tech. Listen. The big opportunity isn't building a boring business. The big opportunity is to build a business.
- [00:40]
Josh
You mentioned that Jesus Christ was the center of what kept your marriage and your family together. For a lot of the entrepreneurs out there that maybe don't have Christ as their backbone, what would your advice be for them?
- [00:51]
Vic Keller
I can't imagine being an entrepreneur, building a business without having God as the foundation of my life, because it is lonely.
- [00:58]
James
Vic, if me and you were to die tomorrow and you had one more message to leave with the younger generation, what would that be? What's going on, everyone? Welcome back to the School of Hard Knocks podcast. I'm James. I'm here with Jack and Josh, and we have an incredible guest for you all today. We're out in Dallas, Texas, with the business mogul Vic Keller, one of the king of exits, man. How many businesses have you built?
- [01:24]
Vic Keller
First of all, I founded 17 companies, so.
- [01:27]
James
And how many of those have you sold? Nine. Nine?
- [01:31]
Vic Keller
Yeah.
- [01:31]
James
You sold nine companies?
- [01:32]
Vic Keller
Nine companies, yeah. 17 founded nine exits. And I've got a few more I'd sell if you want to buy them.
- [01:39]
James
Well, I mean, you want to raise.
- [01:40]
Vic Keller
A little bit of funds together? We can raise a fund right now.
- [01:42]
Jack
It's about time.
- [01:43]
James
Yeah, it's about time. Well, Vic, where I want to get us started off today, man? First of all, super happy to be here with you today, man. I know that you flew in for this, man, so. Yes, sir, we're very happy to be here with you.
- [01:52]
Vic Keller
You guys are amazing. This is my home city, man. This is like, the greatest economy in the world. Dallas, Texas, y'.
- [01:57]
Jack
All.
- [01:57]
Vic Keller
Street it is.
- [01:58]
James
Talk about that real quick. We're in Dallas right now.
- [02:00]
Josh
Yep.
- [02:01]
James
Right. New York was always the financial capital of the world, but tides are starting to shift a little bit.
- [02:05]
Vic Keller
I'm just telling the. The energy and the entrepreneurial spirit in Dallas, Texas, is like no other city in America. I mean, it is unbelievable. I mean, I think it's one of the fastest growing cities in America. But, you know, we are literally sitting right here from. We are a mile away from where there is the largest concentration in the United States of billionaires in family offices that are just doing quiet things behind the scenes. There's a development here called Old Parkland where there's just an amazing, amazing collection of entrepreneurs and wealth builders that are building businesses that, you know, we all know the businesses. We just don't know the money and the people behind them. And those are the folks. So, yeah, this is a, this is a great place for capital. It's a great place for economic growth. It's an awesome place to raise a family. So I'm a big fan of Dallas, Texas. I don't spend as much time here as I used to, but I don't think there's a better place in America to build.
- [02:59]
James
I love it. Well, where I want to get started today is, you know, again, you've sold nine companies, three of those to Berkshire Hathaway before the exit started to happen. Before, you know, Berkshire Hathaway showed up and started buying these companies. Take me back to the exact moment that you realized that the companies you were building weren't just profitable, but they were actually sellable.
- [03:19]
Vic Keller
You know, I don't. I would tell you this. I never built any of my early companies with the mindset of selling them. As a matter of fact, I don't even know that I saw that as an option. I came from, you know, parents that loved me. Well, but my parents very blue collar and, you know, working every single day, still working every single day. And I didn't really know the concept of selling a business, but I had started studying and deconstructing the success of amazing entrepreneurs and business builders at an early age. I mean, I was just really interested in how people were creating wealth and what they were building. But I didn't really think about the exit strategy. I thought about just how could I build something that would provide cash flow and give me and ultimately my family a great quality of life. And I was laser focused on that. And the first collection of companies that were successfully acquired that I was part of, I don't even think I was sitting around thinking about selling a business today. When I build a business, I try to architect the business in a way that it's durable and it's going to attract a strong suitor and it's going to last for a long time. So I'm much more focused on that today. But when I had those early transactions, I was just going to work every single day. And I don't want to say that it was dumb luck by any means, because we really were building great businesses that ended up getting acquired, which was fantastic. But that really wasn't the game plan. That wasn't the strategy. The strategy was, how could we build businesses that provide just amazing value to our customers so we could keep those customers? And then ultimately, I really wanted to just provide for my family. I had a young family and came from. From no financial means. And just the fact that we were able to, like, have profit and make distributions, that was awesome.
- [05:04]
Josh
You started flipping burgers at McDonald's way back in the day, but then you ended up working in H Vac with your dad.
- [05:10]
Vic Keller
Yeah.
- [05:10]
Josh
And I can't help but think that that that scenario and that work experience ended up shaping you to getting into some of the industries that you got in later on. Bring us back to that experience. And what were those things that you learned early on that you think even today's generation could learn from?
- [05:24]
Vic Keller
Well, first of all, you know, it's funny. I was talking to my dad the other day, and I said, I think I want to go buy some H Vac companies. And he's like, why? And. And he clearly has not been keeping up with the private equity world and the press around H Vac companies. But they are very marketable companies today, and the home services industry is just on fire. But to answer your question, When I was 14 years old, I rode my bike down to McDonald's and somehow or another convinced him I was 15, because that's how old you had to be. And I worked there, and I remember flipping those burgers. And I also remember, like, hydrating dehydrated onions. Some very interesting things happen at McDonald's. But I was there, and I was like, this is an interesting business. There were processes, there were systems. I wanted to figure out how to own a McDonald's. Like, I was like, man, could you own a McDonald's? And then someone told me that it was going to take a few million dollars to do that and kind of crush those dreams. I was like, well, I'm probably not going to be able to own a McDonald's anytime soon. So it. It was formative because I wanted to know who owned that, who was the franchisee of that business, who operated it, what were the systems and processes that kept it running? I mean, I just saw customers lined up, so I was very intrigued by it. The other side of that was, as you mentioned, working with my dad in the summers as a kid in the H Vac business. Right. We were hanging air handlers, air conditioning units in attics, and we were setting big air conditioners outside as well and running air duct and thermostat wiring. All the things that you do in the H Vac business. Getting up in the middle of the night and going to a restaurant that had a refrigerator that went out and they were about to lose all their food and had to go in and replace the components. And I watched my dad do that really hard work. And it's funny because I think that it shaped me that I really didn't want to do that work. I was like, man, I want to own these businesses. I don't think I want to get up in the middle of the night. And I love that my dad did that. And I loved, I had that experience. So it's funny to be full circle as an entrepreneur now because I'm like, man, I want to own a bunch of H Vac companies. Right? Because it's really a great business. But yeah, I think that I learned that capitalism and entrepreneurialism and building businesses could happen many different ways, and I wanted to be a part of it.
- [07:36]
Jack
I'm a big believer in having a competitive edge. You know, we've, we've built our business in the, in the media industry. And one thing you just mentioned is that, you know, the H Vac companies are very marketable to private equity. And let's just say the three of us are looking to build a business or buy a business, but we have no experience with H Vac. I previously worked within, like door to door sales for a roofing and remodeling company. And if I look at it, if the three of us were to buy a remodeling company, I don't know about the codes or how to manage subcontractors, all the nine yards that go into that. So for people who are looking to buy a business today, should they look to buy businesses within an industry that they have experience in, like for us, within the media industry, or is it okay to expand the parameters and go wide and buy something they may not be as familiar with?
- [08:25]
Vic Keller
Yeah, so let me, let me reframe that a little bit. You said that the three of you guys were going to go buy one of these businesses. I'll tell you how to make it a lot easier. If the four of us were going to go buy one of these businesses, it'd be a lot easier. Right? Because we would just have, you know, more is better in this scenario. So to answer your question, I don't think that there's anything wrong with going into an industry that is new to you that you don't know. I mean, every business I've ever been involved with, it, I wasn't an expert in that business. I tried to create mastery in that business over time, but I wasn't an expert in the business. So I think that's okay to do that. However, I think that if you are going to go into a business like that, that you need to be laser focused on that business for a long season of time to create durability in that business and to make sure that business is solid and strong. Where I see most people fail is they're like, I want to go get in self storage, I want to go on a car wash, I want to go own multifamily homes. I want to. They like all these different things. And I'm like, man, how do you establish mastery when you're doing that many different things? So I think, to answer your question, what you don't know is okay as long as you can align yourself with people that do know, which by the way, they're readily available and a lot of people have expertise and knowledge in an industry, in a field, but they don't want to be an owner and there's, there's a great opportunity there. So I don't think, again, there's no problem with going into a business you don't know, but you want to be laser focused on achieving mastery in that business.
- [10:02]
Josh
Was there a business that you went into or an industry that you wanted to get into that ended up not working out?
- [10:08]
Vic Keller
Yes. Yeah, I would say, I would say for sure. However, it wasn't because of the subject matter, expertise or the uniqueness of the business. It was because of the lack of time and energy and focus and relentless, just relentless focus on that business that really kept it from being as successful. Any business that I've been in that I've been successful at, I had to just go all in on. You don't have to stay all in on them forever, right? Because, you know, one of the things that I love to talk about is there's this whole mindset around 10x ing yourself, right? Everybody's like, 10x yourself, 10x yourself. And I've been married for almost 30 years and my wife, like, is not interested in me 10xing myself. She says one's enough, right? And so, but as I build these businesses, my focus has really not been on just my intelligent and expertise in the business, but it's really been about how can everyone else be excellent at the business? How can they be, you know, great? So I've just always focused on finding those subject matter experts, empowering them, creating an opportunity for them that, quite candidly, they probably thought they could never have. And really spend most of my time on the people side of the business more than actually on the business. But I got the people that understood the expertise of the business.
- [11:26]
James
I wanted to get your perspective on partnerships because you brought up saying, hey, instead of the three of us trying to go buy business with the four of us, but then there's also a little bit of maybe hesitancy there as well, because the more partners that you have come in, the more that your equity might dilute a little bit. Was that ever a reason of concern for you when you were building or acquiring companies saying, hey, we get too many people in here, not going to make as much money necessarily? Or were you always just thinking about the bigger picture? The more money that it can make with the right people, the more money we're all going to make together. What was your take on having, you know, too many partners in a business, per se?
- [11:55]
Vic Keller
Yeah. So great question. Really good question. When I was younger, my concept around partnerships was exclusivity, meaning I wanted to be the partner, I wanted to be the owner, I wanted it to be me. As I've gotten more experience in business and I really understand the power of partnership, it's more about inclusivity. And I found out the more I could be inclusive, the more people that could be involved, people that are qualified, that are capable, that are going to deliver great value, that has been immensely important to me. I was a young man, I was 23, 24 years old when I started my first business. And I ended up getting my first ever business partner. And he was a multi billionaire, and I had no idea he was a multi billionaire. I don't know that many people were talking about multibillionaires then. But I was building a business and he brought me on as his partner. And I remember thinking during that time, man, do I really want to have a partner? But I was probably a little bit naive and selfish to think I really didn't want to give anything away. But by having that partner, and he was a very significant partner, by having that partner, my success was exponentially better than it ever would have been on my own. And I was really, really grateful to have that partner. I mean, he. I learned so much from him. And I just gained opportunity I could never have had. So I love the power of partnership. Partnership is awesome. Where partnerships become challenging or when people don't deliver value, partnership should really be leverage. Right. Two of us can. Can lift more than one of us can. And so I think that it's more about are people going to add value?
- [13:37]
James
Right. How did you attach yourself to a multi billionaire in your early 20s? Yeah, like, and I think a lot of young people can benefit from this because, I mean, I'm, you know, that if you're young and you can get around people that have decades of experience, I mean, the amount of time and knowledge that you can collapse through that mentorship and partnership with people that are, you know, decades ahead of you and, you know, their perspective business, what advice would you give to people, you know, how did you attach yourself to the right people that young?
- [14:03]
Vic Keller
Yeah. So the collapsing of time is. We're in a really a state of time right now where you can collapse more time than you ever could before. And I love what you guys do in advocating mentorship and people having mentors and learning from other people. And really what you're doing is awesome. I think that if you take the power of mentorship and you take the power of technology that we have right now, specifically with a lot going on, that's AI, you can collapse a lot of times. So it's a good question. So my story is, I was 24 years old, I started my first business, and my customer was car dealerships. I was trying to sell products to car dealerships. And by the way, selling products to the best salespeople in the world sometimes is difficult. Right.
- [14:50]
James
What products were you selling?
- [14:51]
Vic Keller
I was selling all different kind of products, but the core product that I was selling at this time was a device that went on the tires of the vehicle and it told you if the tire was properly inflated, which is an interesting story in itself because that product had a lot of challenges that we can talk about that it worked out, but it was an interesting start. But I was trying to sell this product to car dealerships all over Dallas, Texas, actually. And. And I could not get a meeting and get anything closed. And finally I was like, who owns all these car dealerships? And I found out who owned all the car dealerships. Which was this gentleman that had, you know, he was kind of the Sam Walton of the car dealerships. He built this biggest collection of amazing car dealerships. And he was in Kansas City, Missouri, and I found a path to calling his assistant one day and getting A meeting. And the next thing you know, it was easier to get in front of the guy that owned all the businesses than the people that were operating the businesses.
- [15:50]
James
What did you do in that meeting?
- [15:51]
Vic Keller
And, boy, what did I do in that meeting? First of all, I had no idea who I was meeting with. I mean, I knew I was meeting with a baron that owned, you know, a bunch of extraordinary businesses that I wanted to have as customers. But I went in there with tremendous humility and explained to him how much value I thought I could bring to his businesses. And that meeting ended ultimately in a partnership. So I went there to try to close a deal. And really that one meeting probably changed the course of my entire life.
- [16:26]
Josh
You had a business to where you had a conflict, where the fa, the FAA came in and tried to shut you down.
- [16:33]
Vic Keller
Yeah.
- [16:34]
Josh
And in that moment and with that setback, how did you handle and get over something like that?
- [16:38]
Vic Keller
Yeah. So I want to go back to that first business. Well, they were all connected businesses, but the tire monitoring system. I had found this product overseas, I brought it to America, and it was right when there was a lot of failures happening with tires and tire inflation. Good news for you guys is it was right before you were born that this was happening. But cars didn't used to have the gauges inside that tell you what the tire pressure is. So there was a manual product I brought to the US And I installed by hand. I personally installed these little valve stems that go on, on the wheels and the tires on 1600 tires. So that'd be 400 cars. And it was an amazing product. I was so excited about it. It was in Phoenix, Arizona. It was the middle of August, and the day after I installed the very device that was going to keep tires properly inflated, that customer called me and said, I have 1600 flat tires. So every one of my products, a seal inside of them melted and they failed. And I was in essence, out of business, had no money. It was a big problem. So I got on a plane and went back to Asia, where the product came from, figured out how to re engineer the product, begged for forgiveness with the customer, and continued to sell that product for 10 years. But I think I learned from that situation more than any other situation. That failure is going to happen, and it's how you handle it. I was relentless. I had everything to lose. I mean, everything to lose at this business didn't work out. So I went and figured it out, begged for forgiveness. I was very humble. I didn't so much beg for forgiveness from the manufacturing company that made the product in Asia. I think I might have put them in like a headlock or something. I was pretty frustrated. But we worked together and made it happen. So that was a huge failure point for me. And the, the FAA story that you asked about is funny. That's in a separate business. So I had an automotive specialty chemical business where we made really high quality premium products that are used to service vehicles, and they were used by automotive technicians across the United States. And my warehouse manager was in a hurry to close the month out, and instead of sending a box of highly flammable automotive products via a truck, he decided to put them on an airplane. And one of those bottles started leaking on the airplane. And the plane was going from Dallas to Phoenix. It was actually a Southwest Airlines flight. And it had to make a stop because it had a bit of an odor and a fuel problem, which was our product leaking out of a bottle. And within 24 hours, I had the FAA at my front door. And those guys carry guns. And they were, they were there to talk to me about what happened. I had no knowledge of what happened. They didn't want to hear about that. But the guy that worked in the warehouse, I think, you know, he was, he was scared, and he, he tendered his resignation. He said, you know, I'm sorry I did that. It was a mistake. And I explained to him that there was no way he was going to quit or leave because we were spending a lot of money on his education to never do that again. And so didn't terminate him. And he still works for that company today.
- [20:02]
Josh
Wow.
- [20:03]
Vic Keller
Yeah. So, you know, I think not giving up on people is a big part of, of success in business as an owner, as a founder. When you have people that make knucklehead decisions and don't do things right, it's so easy to say, you know what, I'm just going to get rid of them. But, man, if you can stick with someone when they misstep, the level of loyalty that you have with them and they have with you is. It's exceptional.
- [20:27]
Jack
I love that, is the fact of, like, mistakes are bound to happen in any industry that you decide to get into, but you're. You're going into different verticals of, you know, the automotive industry. And how are you deciding? Like, I'm sure, like, you're not a, you know, an expert in every single vertical that you going into. So are you buying into these businesses and buying the talent within them, or are you saying, hey, you're. You're an expert within this industry, we should partner on this and create a business together. What does that look like?
- [20:54]
Vic Keller
Yeah, I think there's two different models there. There's two different models. I am. I love to build teams. I love to build teams. I love to hire people. I love to create professional environments where people can sharpen each other. I just. That's. That's my passion is really identifying talent and putting talent in businesses. I'm not scared to go into an industry or a business that I don't know know, and I'm not scared to bring people into an industry or a business that don't know that business, like, if. If they're great. So I don't. I don't think that I have a track record of going into businesses with experts. I go into businesses that are, you know, one of the greatest examples I can use is Mr. Buffett talks about, you know, if you get involved in a business that you don't understand or it's complex, or there's a lot of complicated words that people use to describe it, then it's probably not a place that you want to be. And so most of the businesses that I go into, all the businesses I go into, they're pretty common sense People really try to make business complex, and maybe that's a strategy to create a mode around it. But if you really distill down most businesses and. And of course, there's some, you know, I'm not trying to get rockets to, you know, Mars. I'll let Elon handle that. But, you know, most other businesses are very approachable, and it does come down to having great people. And I'm not saying you don't need subject matter experts at all, But I don't really go into businesses where you can't get extraordinary people to do great things in a business that may even be new to them.
- [22:37]
James
What was your process for identifying talent in a, I guess, relatively boring industry like the automotive industry?
- [22:43]
Vic Keller
Right.
- [22:43]
James
Because in software it's like, okay, yeah, the guy knows how to code better than anybody else.
- [22:47]
Vic Keller
Bring them on.
- [22:48]
James
How did you identify talent for all these different teams that you were building?
- [22:51]
Vic Keller
Yeah, so the automotive industry, as an example is. Is. You could say it's a boring industry. It's a very wealthy industry. Right. There is a lot of money to be made in the automotive industry, and it's a. It's a vibrant industry. I. The first company I founded when I was 24 years old, we sold a product. But my focus was really never on the product. My focus was on how to professionally Develop internally, my own team and externally, the customers we're serving. And that may sound a little bit strange in the sense of I was really focused on if we could help people grow, that we were going to be successful at retaining customers and we were going to be successful at retraining, retaining employees. And I do the same thing today. I mean, I will go into a company, I just made an acquisition a couple years ago, and the first thing I did walking into that company was install a whole professional development system and process for the business. So the first thing I look for in people is are they curious? Do they want to be intellectual? Do they want to learn? If they do, man, that's. That's the funnest thing in the world. But I follow the three C's of hiring people. Character, competency and chemistry, right? We want people that have character, not people that act like characters. We want people that are competent, they're not just intelligent, but they have the desire to be curious intellects and to learn. I love those people. And then the last one is chemistry. And chemistry is, you know, how can we all work together? Can we get along? I don't like hiring people that enter into the equation that are smarter than everyone else. And we're like, oh, don't worry about Joe. He's just that way. That's how he is. Like, no matter how smart or how great an individual is, if they're not going to contribute to the chemistry, even if they're a unicorn, we don't need them. We don't need them because it's not going to work because there's no law of compound. So, by the way, I did not invent character competency in chemistry. Chick Fil A hires for character competency in chemistry.
- [25:01]
Josh
That's where we started right here.
- [25:02]
Vic Keller
It is. So. So Chick Fil A is unbelievable. They do $9 million a year per location, and their second best competitor does somewhere around 2 million a year, right? From the time you order at Chick Fil A to the time that you get their food, your food, it's about 137 seconds that pass between that time, right? And you'd say, what's different? I mean, the chicken sandwich is awesome, the waffle fries are great. But what is different? The difference is that they hire for character competency and chemistry. And I'll tell you a fun story, and this is just absolutely crazy to me. I hired a gentleman in one of my companies a little over a year ago, and his name is Brad, and he was an elite soldier in Delta Force, the most elite military organization, you know, I would say, in the world. They just went on a pretty big mission down in Venezuela, got a lot of press. But Brad was an elite guy there, did an amazing job. And I was so excited to learn from Brad how Delta Force identifies the best people to work in what they call that unit. What does that look like? And so we sit down one day, and I'm like, brad, tell me everything. Like, how do y' all hire these people? And I'm taking notes. I'm ready to implement this in my business. He says, man, we hire people that have character, people that are smart, and people that can get along with each other. And I'm like, wait a minute. Delta Force and Chick Fil A hire for the exact same thing. Character, competency, and chemistry. And so I had the privilege of learning about how Chick Fil A hires many, many years ago. And so I've kind of adopted that. It's a little bit more extensive than just that. But, man, if someone can pass those three attributes, you're heading in the right direction.
- [26:52]
Josh
You've been in a numerous amount of industries over your career, and I feel like today, some of the trends that everybody like. I feel like our generation gets Shiny object syndrome. Everyone starts talking like, it used to be crypto and NFTs, and then today, I feel like boring businesses is a big thing that everyone likes to throw around. And AI. What do you see, though, after being in all these different industries as the next two or three real big opportunities that people need to be paying attention to.
- [27:21]
Vic Keller
So, first of all, this is the greatest time in history to be an entrepreneur and to build businesses. I mean, we are in, like, this is. I don't know if it's the golden years, golden decade. I don't know how long it's going to last, but we are in an unbelievably special time right now. So if someone's thinking about starting a business or they want to, you know, get a mentor that's an entrepreneur, and they want to learn what it means to start a business. This. And I love the work you guys are doing in that, because this is the time. Like, people always say, man, I missed the opportunity. Fun story. I remember my. My son who's 20, 29 years old now, my oldest son, he told me 10, 15 years ago, I don't remember. He sent me a text message one day, and he said, dad, you should buy bitcoin. And I said, what is bitcoin? He said, it's cryptocurrency. I Said, what is cryptocurrency? And by the time we were done the conversation, I said, you need to, you know, you need to focus on school and don't do that. I should have bought bitcoin. I have since then. But I missed an opportunity. And he sends me, he texts me the screenshot of that conversation and the calculation of what the bitcoin would be worth. So I missed that time. I'm not missing this time. And no one else should miss this time. This is an amazing, amazing time to build a business. To answer your question, if I'm building a business today, you hear the term boring business. You hear AI, you hear tech. Listen, AI is amazing, but AI is not going to replace people. AI is leverage. It is extraordinary leverage. It compresses time and it also creates just opportunity for people that don't have funding and capital that they've never had before. So having tools like AI is great. But the big opportunity isn't building a boring business. Like the big opportunity is to build a durable business. A durable business going to last. And if you really try to distill down the greatest organizations in the world, look at all the companies that Berkshire Hathaway owns. And if you really say what's unique about those businesses, they're durable businesses. They're businesses that have been built that can stand the test of time. And if there's headwinds or economic compression or challenges that happen, they're still going to live. So I would say learning how to build a durable business is really important. And if that happens to be a boring business, I have a follow up to that.
- [29:44]
Josh
Because that durable part, how big of that does it have to do with cash? Because I look at like Apple and their cash reserve is just enormous. And so I feel like, like how does that sort of play in a role in those companies that Berkshire Hath.
- [29:58]
Vic Keller
Yeah, I mean, cash is, I mean, cash is king, right? People have hats that say that cash is really, really important. But a durable business is a business where no matter what's going on in the marketplace, your customers cannot stand to not have your products.
- [30:14]
James
Recession proof.
- [30:15]
Vic Keller
That's recession proof. Right. And Mr. Buffett is a great saying. I think it's, you know, building a recession proof business is really good, but it's better if you can build a depression proof business. Right? Something that really has staying power. So cash is important. I kind of look at seven different attributes of building a durable business, and cash is one of the attributes. People are number one in building a product and a value proposition that is just relentlessly, you know, excellence for your customer is just number one. So you can do some businesses that are commodity businesses where you really don't know how to differentiate yourself in the market. I would say it's, those are the businesses where it's tougher to be durable, but the businesses where you can differentiate yourself in the market, that's, that's the core attribute of durability.
- [31:08]
Jack
You've started 17 companies, exited nine. And the common theme here from the beginning of the podcast has been all about durability. What exactly what are the principles that someone can put into their business that's going to make that business marketable to. For acquisition? And just what are the principles for building a durable business?
- [31:28]
Vic Keller
Yeah, so I love the question. I think the first principle for building a durable business is this. And let me give you this analogy. I'm a pilot and, and I think one of the coolest things that I've ever done is, is learned how to fly an airplane. So if anybody has a passion or an interest in learning how to fly an airplane, it's, it's, it's worth the time, energy, and investment. But one of the things that you learn as a pilot is that when you're flying that airplane and you get into bad weather, your mind and your body play tricks on you. And is what I mean is if you lose perspective of the horizon, you may not know where you're going, but if you have the right systems and processes in place, which in an aircraft are gauges, right? You trust the systems and processes that are in place in the gauges. You don't trust what your body or your mind is telling you, that you maybe don't have the situational awareness that you think you have. So in building a durable business, I think the first thing that you have to do is implement and create systems and processes certainly that you can tweak. But they drive the business, they're consistent in the business. And your employees, the people that are joined and building with you, they very much understand what success looks like, not based on emotion. Right. So is it something that's systematic? Is it gonna outlive the founder? Deleveraging the founder is most important if you want to build enterprise value. And it's most important if you want to build a durable business. So that would be one element of it. And I would say that having a great feedback loop in most businesses, it sounds so simple to say something like that. But when I think about durability, a feedback loop is so important to really understand how the Market's responding and reacting to the customer, to your product, but also how your employees are responding and reacting to what you're doing. So I think a lot. Listen, adrenaline is not scalable. Passion and emotion are not scalable. If you want to scale a business and you want to build a durable business, you have to think about building a strong foundation and all, all the components of it.
- [33:42]
Jack
So people always say that if you lead their company and it doesn't grow without you, you don't have a business, you have a job.
- [33:48]
Vic Keller
Yeah.
- [33:49]
Jack
So as a business owner, you're putting the systems in place. How can you actually test to see if this business can operate and sustain without me actively in it?
- [33:58]
Vic Keller
Well, I think that the most important thing in any business, any business, are the people. There's nothing more important than the people. So testing the systems and the processes and the, the different attributes of the business is really not a test of those elements. It's a test of the people. And so if you, the best way for a founder or a CEO or any leader to know, even if you're a departmental manager to know if your business has sustainability and durability without you being involved is really a direct response, reflection of the talent. So it's, it's all about the people. I mean, I, this, you know, this amazing billionaire that I mentioned that I had an opportunity to partner with when I was a young man, he told me, he one day, he told me what the three most important things were in business. He said he wanted to tell me and he said it's people, people and people. And I was like, okay, so it's people. And now I understand it to be people, people and people, because you can't forget it. Right. And so if you're trying to build a business that has durability to it that you can step away from, at the end of the day, what you're going to trust more than anything are the people that are in place.
- [35:08]
James
So we build that durable company. What I want to ask you about is how to scale beyond where most businesses get stuck. And in particular, when we talk about boring businesses, you see oftentimes when they grow out to that million dollar company, they get stuck in that like, what is it, 2 to 5? 3 to 5?
- [35:23]
Vic Keller
Yeah. Have a hard time breaking that 5 to 2.
- [35:26]
James
What is that bottleneck? Most common bottleneck in that 3 to 5 million dollar range that you see most common across all of these different businesses that if you were to go in there and consult for that company, it'd be the first Thing that you're hashing out with them to help them scale to that eight, potentially multi, eight, even nine figure business.
- [35:42]
Vic Keller
So two things. One is in today's marketplace, there is a huge advantage for any business that knows how to act and be professional. And I like to say that we should all think big, but acting bigger is even better than thinking big, acting bigger. So when you look at a business and you look at the professionalization of the business, is it built to scale in the sense, is it professionalized? And that could be systems, processes, whatever it may be, but it comes back to the people, right? If you want to own the marketplace, if you want to dominate, if you want to have an irresistible offer, I just. Professionalization, it might sound very, very simple, but I can tell you, no matter how small or how big of a business that I've been in, and you guys are doing a great job as you're building out your business in doing this, but professionalization is key. So I think the first thing is understanding how to professionalize the business and what goes along with that. And I'm going to come back to people, is have you built a business that's not just going to attract the customer you want to serve, but is it going to attract the best talent that's available in the marketplace? If you're an AI driven business, if you're a tech business, I don't care what you're doing any business, how do you get the best talent? And if you can get the best talent and the smartest, most passionate people, your business is going to scale. But you have to get people that truly want to drive the business. And a big part of that, James, is that people, leaders in business sometimes lose sight of casting the vision of what the opportunity is. And again, I've had the privilege of having some amazing business partners in my life. And if I look at the ones that created massive, you know, tens of billions of dollars in wealth, and I look at the ones that have just struggled and grinded through it, it all comes back to people and it comes back to how big can you think? And you know, I have a list of these lessons I've learned from extraordinary people I've had the privilege to work around and with. And you know, at the top of that list is just that you can't think big enough and you need to always challenge your thinking. So most of those companies that hit that 2 to $5 million mark, it's because their founder or leadership leveraged, right? And they can't step away from the business.
- [38:13]
James
I wanted to shift gears just a little bit. Okay, you've been married for 30 years.
- [38:18]
Vic Keller
Almost 30. Coming up.
- [38:19]
James
Coming up on 30 years. And you mentioned that I think both your parents were married three separate times.
- [38:23]
Vic Keller
Yeah, my parents are. They established mastery. My parents are amazing, by the way. Yeah, I love them. They're. They're extraordinary. But yes, they, they. They each got married three separate times.
- [38:35]
James
But you also have two sons that you're very close with.
- [38:38]
Vic Keller
Yeah, my sons are my best friends in the world.
- [38:40]
James
We see, you know, not necessarily just people that we meet, but there's a lot of entrepreneurs. They become incredibly successful. You know, they build tremendous companies, but that family component kind of goes out.
- [38:51]
Vic Keller
The door for them.
- [38:52]
James
It didn't seem like that really happened with you. How did you integrate your family life with being, you know, a loving dad, having a great relationship with your sons, as well as, you know, having a marriage of nearly 30 years, but then also having so much success in the business world? What was the secret to that foundation?
- [39:09]
Vic Keller
Well, there was no secret to the foundation. The foundation was Jesus Christ the sound. The foundation was, you know, I get choked up talking about it, but the foundation was just building our family around God and faith. And, you know, that was really for us. And to this day, that. That is it. And I'll tell you, I married an amazing lady that. That loves the Lord and knew how to really embody that within our family. And that was huge. So that was a big, big part of it. And, you know, I've got a funny story. I tell it publicly, so my wife wouldn't mind me saying it, but we were dating in college and somehow she got pregnant. And those aren't the kind of relationships that usually, you know, last for decades, but in our case it did because we grounded our marriage and really, you know, everything about us and our faith. And so, you know, God has been just so good to us. So, so good to us. And that has been the core of it. I would tell you that my family has. I've, as I've been building companies, I love to work. Like, I'm so passionate about working. Like, I'm so irritated that there's 24 hours in a day. I mean, because I just want to work, like, more hours, right? I love building, I love creating, I love innovating. But is what I love more than anything is helping other people do that, right? Because I can't believe that I've had the privilege and the opportunity to build businesses. So I just, I get so fired up about helping other people. Do it. But that being said, I think my family has always seen my passion and love for business and for building and creating, and they've been highly supportive of it. But, you know, I tell people all the time, I. My kids both played very competitive sports all the way through high school, one of them through college. And I never missed a game. I never missed an event. I did miss a few track meets because those were really boring. And so. But I was there. I was there. I was present, and I was very intentional about when I was there and present. But, you know, I spent most of my career early on working in an industry where, you know, I was building businesses and fighting and scrapping every day. And kind of the stripes of that industry that I was involved with, the way you really gain credibility and people take you seriously is by your way, work ethic. So it was kind of hard to sneak away sometimes. And I would be the dad on the sideline, on my cell phone, working a deal, watching my son hopefully score a touchdown. And so, you know, I. I just. God for number one, for two, an amazing wife. And, you know, my. I'll tell you this as well. My sons are. They are free thinking, you know, grown men. They have their own opinions. They have their own life. They do their own thing. And. And with that, you know, they don't think exactly like I do. But I think we've always really respected that we're different, and we have different paths and different courses. And so I think your relationship with your kids and with your wife is no different than maybe a customer relationship. You got to work really hard for it. Right. You've got to work hard. And I meet a lot of people that say, hey, well, my kids need to respect me because they're my kids. And I don't think that's a good strategy. I think that you have to earn that respect forever. And, you know, that's just how it works for us.
- [42:36]
Josh
You mentioned that Jesus Christ was the center of what kept your marriage and your family together.
- [42:41]
Vic Keller
Yeah.
- [42:41]
Josh
And a lot of the entrepreneurs that we interview on Hard Knocks, you know, a lot of them believe in something bigger than themselves. And Jesus Christ being a center point of that. You know, James just did an interview with Jameis Winston, the quarterback.
- [42:53]
Vic Keller
Yeah.
- [42:53]
Josh
And James said, you know, how did you make your first million? And his first words out of his mouth were, God made me a millionaire. So for a lot of the entrepreneurs out there that maybe don't have Christ as their backbone, as that thing that's bigger than them, what would your advice be for them. Because entrepreneurship can be hard. It can be lonely. And for me, even just building a business, I've realized how big of a role Jesus Christ is, has played in my life and keeping me centered on that vision and what we're building. So I'd love to hear your advice to entrepreneurs that may not have that center point.
- [43:25]
Vic Keller
You know, I am, I really appreciate the question. So I'm, I'm a long way away from being the smartest guy in the room most of the time. By design. I like to hire smart people. You know, there's just a lot of things in my life that, that I am not good at, but the strength that I get from having Christ and I make some really dumb decisions, right? I mean, I've made some dumb decisions, done some dumb things, but it is so I can't imagine being an entrepreneur and building a business without having God as the foundation of my life because it is lonely. Building businesses and taking risks are lonely. It's scary. There's a lot of fear that's involved. But if you can come back to that foundation of having God in your life, it's just absolutely masterful. So listen, you know, I would say if you are doing anything, if you live on this earth, if you live in this world and Christ is not at the center of your life, I would say go visit a church. Go visit a church. Go to a church on a Sunday. There's some churches you probably shouldn't go to. There's some you should go to, but just go to a church. Go to a church and you know, we, we need community. God designed us to have community. And the reason that there is so much popularity and so much growth right now in everything that's happening online, right? In digital environments, the reason there's so many masterminds, the reason there's so many different programs and offers and we could talk about it is I think people really long for community as much or more than knowledge. People want community. The best community you're ever going to get in your life is one that's Christ centered. So I would say go visit a church. There are some amazing, amazing authors that have written great books that, that are worth reading. Man. If you're watching this and you're like, you know, Vic, I don't know where to start. Shoot me a dm. Shoot me a dm. I don't have an offer to sell you on, but I would love to tell you about Jesus and I will make time to do it. And you know, one of my closest friends in the world is the pastor of my church. His name's Matt Chandler. And, you know, go follow Matt and just listen to what Matt has to say. Go read Matt's book. Books. And there's so many other amazing pastors in our country that they've given their whole life. They've given their whole life and every ounce of their life to spread the gospel of Christ. And I don't know if I'm answering your question, man, but, but, but I just. I could not imagine living this life without God.
- [46:10]
Josh
Absolutely.
- [46:10]
James
I love that. And I wanted to kind of go back to the business real quick.
- [46:16]
Vic Keller
Yeah, let's do it.
- [46:16]
James
I want to know that for what that first conversation was like. Like, you know, that first process of selling that first business. Right. Because again, that's.
- [46:27]
Vic Keller
Yeah.
- [46:28]
James
Can you take us back to when you first. You know, the process of getting contact for people wanting to buy your company to eventually to sell what you did with that money. Take us back to, you know, selling that first company.
- [46:38]
Vic Keller
Sure. So the first company I sold was a media publication magazine. And so when I started my first company at 24 years old, I was trying to find a place to. A way to tell my customers about what we were doing. And I couldn't find anywhere to advertise that I could afford. I would look at all these industry trade publications that were B2B industry trades, and I couldn't. I just couldn't come up with anything. So ultimately I ended up meeting a guy that told me what it cost to print a man magazine. So I created an industry trade magazine that I may have taken almost all the ad space in the entire magazine to advertise our products and services. It was easy to get people to write articles for them. And I did that for several years. And then the industry kind of started figuring out that I owned the magazine. And so I had to sell it. And I did. Well, it was my first ever deal. It was a pretty simple deal, but sold that business. Nothing glamorous there. It was a great exit and a great return on investment. But that was my first one. I think you're probably asking about the bigger. The bigger ones and the bigger opportunities. I go back to all I did every day. And remember I had a business partner early on who was a very, very successful multi billionaire. And he took a huge bet on me. Like a huge bet. And, you know, all I focused on every day was building a great business. And I remember telling. I had someone ask me, I think in 2013, 12 or 13, they said, you know, do you want to. Would you ever sell your company? And my, my response back to them and I was thinking, heck no, I wouldn't sell this company. Like, I mean, I'm making more money than I ever thought I'd make it my whole life. Like, I was getting paid like an NFL quarterback. I mean, I'm like, this is the best deal ever. And I remember making the comment one day that, you know, I, I guess if Warren Buffett ever called, I might, and, and that is not how that deal happened, by the way. I wish I could tell you that I was sitting in my office and, and that call came in. But through a unique series of events, my business was part of a, you know, first business was part of an awesome acquisition with Berkshire Hathaway. And, and you know, that was really fantastic. I would say that the best thing you can do to build a business and position it so it could get bought, and not just bought, but it's attractive to the most sophisticated, highest paid players that are in the market, which, by the way, there are so many people, there are trillions of dollars right now in America sitting around waiting for someone to sell them a company. I mean, everybody wants to buy a company right now. There's tons of capital available. But if you build that business with the fundamentals of it being durable and you're able to deleverage yourself, your multiple is going to be twice as much. So, you know, for me, I vividly remember when the wire came through into the account and you'd say, well, then what happened? I, I may have gone and bought a nice sports car. I mean, there, there may, I, I actually vividly remember buying a blue McLaren. But you know, I, I, I may, I, I may have, I may have done some fun things. But I'll tell you what's interesting is if you build a great business, it's because you, and if you build a great business and you exit that great business, that means you also exit those people. And I'm not saying there's a problem with that. Right. I'm in that business. I own a private equity firm as well and love that business. But. The money doesn't always make up for the distance of the relationships that you've built that built the enterprise. And so everyone that has these glamorous thoughts about building a business and selling it, by the way, you should always build a business that it's durable and it can be sold, but it doesn't always mean that it's the right thing to do.
- [50:49]
James
When you say deleveraging the founder do you, does that mean like if there's any sort of affiliation that the founder, the head of the company has to that company, like they need to kind of like what, what do you mean by deleveraging the founder of that company?
- [51:03]
Vic Keller
Well, there's two, two elements of that. One is the business should not be dependent upon the founder. If you're, if you're.
- [51:09]
Jack
So you say.
- [51:10]
James
That can't be that.
- [51:10]
Vic Keller
Exactly, exactly. James, What I'm saying, what I'm saying is. Yeah, yeah, yeah. Jack and Joshua, we got it, we got it. Like, you know, you guys got a team, but yeah, no, long term, the success of your business doesn't need to be about you guys. Where you are right now in your business building stage and what you guys are doing and being several years in, it's all about you. You're the spirit, you're the speed, you're the pulse, you're the passion, you're the strategist, you're the executioner.
- [51:36]
James
You're saying that we need to be building up everything behind this.
- [51:38]
Vic Keller
Absolutely, absolutely. You want to deleverage it so the business isn't dependent upon you. And you know that's, that's difficult to do, but you can do it. And by the way, if you're deleveraging the business from the founder, from the leader, from the CEO, from the owner, that means you're building the business to scale. That means that you're, you're multiplying the business in great ways far beyond than what just one person can do. And so that's just the right thing to do in any business. Right. In my opinion. So I don't know if that answers your question, but. Yeah, but, but definitely I would tell you in today. There's a big problem today where private equity is buying businesses that are very, very founder centric. I've done this, guys. I've bought a business that was very, very founder centric. The founder did not deleverage himself from the business. I bought the business and I will tell you, it was not successful because that business was not deleveraged from that founder. And so you can buy businesses at a discount. You can buy businesses at a discount that are founder centric. It is not worth the difference. Discount. You are way better off to pay the premium for a business that is able to be sustainable without that founder.
- [52:56]
Jack
When you're exiting a company or looking to exit a company, I mean, you're working with people who know their numbers, who've done this a hundred times and they're some of the Best negotiators in the world. You can't take every offer that's across the table. Can you tell us a story about a time where maybe you had to walk away from a deal where I.
- [53:14]
Vic Keller
Had to walk away from a deal that I was on the buy side.
- [53:17]
Jack
Or sell side, sales side.
- [53:19]
Vic Keller
I was on the, like, I was selling.
- [53:21]
James
You were selling somebody maybe try to, like, lowball you?
- [53:25]
Vic Keller
Oh, yeah, you shouldn't try to lowball me. And so, yeah, I mean, I'm an operator. I build. I. I build businesses. That's what I love to do. And so a lot of people that are in the business of buying and selling companies, they're financial engineers. Right? Which there's no problem with. I mean, there's many crazily successful billionaires that are not operators. They're just good financial engineers. I've got a great friend that's one of the biggest hedge fund guys in our country. He's extraordinary. And he's not an operator. He's a financial engineer. So I'm an operator. So I'm not scared to keep a business if the valuation of what I can trade it for is not appropriate, because I'm okay to keep operating that business and to put the team in place that's going to operate the business. So I've definitely had to walk away from deals where, you know, people have come in and said, hey, I'll give you. This happened recently, actually. Someone came in and tried to buy a business, and they offered us about 70% of what it was worth. And, you know, I just. It was easy to say no. It was easy to say no. It's. It's a lot easier to take a business from good to great if. If you know the business and you really, really know the business. And usually people that are selling businesses in a down market, it's because they don't have confidence in the business.
- [54:52]
James
Right, Vic? We like to end these podcasts off with two questions. I'll start, and then Jack will end it off for us. But, Vic, in one sentence, if me and you were to die tomorrow and you had one more message to leave with the younger generation, what would that be?
- [55:05]
Vic Keller
Be ferocious about gaining knowledge. We are living in the coolest time ever in the history of the world to gain knowledge. You've got extraordinary podcasts and the work that you guys are doing. YouTube's got so much education. If you don't like to read, you've got audiobooks. There's great, great business leaders and builders that are in the marketplace. You know, I would say that, that absolutely, number one is be ferocious and be contagious about gaining knowledge. Knowledge is power and inspiration is awesome. And I think we have a, a lot of people gain inspiration. But if you want transformation, that's going to be knowledge and inspiration. You can, you can't have one or the other. You got to have them both. So I would just say, and I'm, I'm sorry, I can't give you just one answer, but be ferocious about knowledge. Be ferocious about learning. Learn everything. I mean, my goodness, if you're living in this world right now and you're not learning about AI and you're like, oh, that's a fad. It's going to go. Well, let me just tell you, it's going to go just like bitcoin went. And it didn't go, it just went up. Right?
- [56:13]
James
You forgot one thing, though. And buy car washes.
- [56:16]
Vic Keller
And buy car washes, baby. Yeah. I love simple business.
- [56:19]
James
Are we gonna buy some together?
- [56:20]
Vic Keller
We should, I mean, I'm.
- [56:21]
James
Is that cool?
- [56:22]
Vic Keller
I'm building hundreds. We're ready to go.
- [56:23]
James
We're ready to give you some money.
- [56:25]
Vic Keller
I'm fully vertically integrated, baby. We go factory. We own the. Of course. I love partners. If you want to build a car wash in America, you should call me. We have the. We own the entire supply chain.
- [56:34]
James
And so, so here's, here's what we're going to do. We're saying this on the podcast. We're ready to go. We're gonna give you.
- [56:40]
Vic Keller
Let's do it. Let's go. Let's go. Done. Shake the damn head. Shake the damn head, you guys. Listen, I'll tell you a quick, quick car wash story. I, I love the car wash business. It's simple. Who doesn't understand a car wash, right? It looks like an ATM machine that just spits out money. And guess what? It is. That's what it is, right? And so I wanted to get in the car wash business and I started building car washes and buying equipment from people and it was just fragmented, man. It was like, it was like, you know, having to take all your ingredients to the, to the, to the restaurant and try to find everybody to cook it. And so it was just a mess. So I went and bought an amazing car wash equipment manufacturer, right? I mean, we bring in raw 304 gauge stainless steel and in seven days we put out a robotic car wash. I love that vertical and 105,000 square foot industrial robotic manufacturing facility in North Carolina. It's awesome. But that wasn't enough. Because in a car wash, you've also got chemistry, right? That soap, it's important that it works. I launched a chemistry company and then you've got to keep the thing up and running. So we launched a national service and parts company to keep them running. But my point is, I kept trying to build these car washes and I'd have to go here and here and here. And I was like, can we just make it easy? So I'm not trying to pitch my car wash business. It's the one business that kind of just sells itself, but it's an amazing business. We're building hundreds of them right now. I could go on forever about car washes, but, yeah, I'm happy.
- [58:03]
Josh
So, Vic, how old are you now?
- [58:05]
Vic Keller
I'm 51.
- [58:06]
Josh
51. And if tomorrow it was all said and done, how would you want to be remembered?
- [58:12]
Vic Keller
Oh, I would want to be remembered as an authentic person that loves people. I would just. I think I would just. At the end of the day, I don't think there's anything more powerful in this world than love. And I get wrapped up in some pretty big business stuff, so. But I. I would just want to be remembered as someone that loved people and most importantly, loved God.
- [58:35]
Josh
Amen.
- [58:36]
James
We love that man. Guys, that's a wrap on today's episode with the legendary Vic Keller. We're going to put the links down to his social media platforms so that way you guys can tap in with Vic and follow along with all of his content and his journey. And be sure to like and subscribe for amazing content we've got coming every week, guys, because we are bringing you guys, the biggest business owners, the most incredible guests to the Hard Knocks podcast and do yourself an even bigger favor. We are giving you access to our multimillionaire and billionaire network inside the school of mentors. If you go down and click the link in the description of this video, you can get access to the number one most powerful entrepreneur, community and network in the world where you can hop on live calls with the eight, nine and even ten figure entrepreneurs we interview at the school of Hard Knocks. So we can't wait to see you on the inside. With that being said, we'll see you in the next episode.