WEBVTT 1 00:00:00.000 --> 00:00:03.680 A lot of times the thing that I thought when I started building the business that I was going to sell 2 00:00:03.680 --> 00:00:07.840 wasn't actually the thing that the ultimate investor ended up valuing. I've built and sold nine 3 00:00:07.840 --> 00:00:12.640 companies. The last one I sold was 46.2 million and so I'm just drawing on my experience from 4 00:00:12.640 --> 00:00:16.960 selling those to different partners, competitors, private equity, strategic buyers so that can tell 5 00:00:16.960 --> 00:00:21.280 you the things that I've learned so that you can get there much faster than it took me. There was a guy 6 00:00:21.280 --> 00:00:26.480 who had rental events. So basically he started an event business where he would, he basically 7 00:00:26.480 --> 00:00:32.640 have a venue that he would rent and he'd have two, three events a week there and he would charge 8 00:00:32.640 --> 00:00:38.640 whatever the day rate is for the event and that would be more than what his rent was and that was 9 00:00:38.640 --> 00:00:44.960 the entire business. And so he had three locations, he sold those and then he started a coaching 10 00:00:44.960 --> 00:00:49.600 business or an education business around helping other people find event spaces, rent them out and 11 00:00:49.600 --> 00:00:55.200 do the same thing that he did. And so he was like, hey, I want to sell this business the way that 12 00:00:55.280 --> 00:01:00.720 you sold Jim much. And after talking to him, I was like, dude, I think you're going about this all 13 00:01:00.720 --> 00:01:05.200 wrong. You're trying to sell the goose when you should be trying to sell the eggs and this will be 14 00:01:05.200 --> 00:01:08.320 the common theme throughout this is that most people are trying to sell the goose rather than sell 15 00:01:08.320 --> 00:01:11.440 the eggs and you never want to sell the goose. You want to keep the goose and let it keep laying 16 00:01:11.440 --> 00:01:15.440 golden eggs right so that you can keep selling them. And for those of you don't know the story of the 17 00:01:15.440 --> 00:01:19.280 the goose and the golden egg, I'll read it to you. It's two seconds. There was once a coaching 18 00:01:19.280 --> 00:01:22.480 man who possessed the most wonderful goose you can imagine for every day when he visited the nest, 19 00:01:22.480 --> 00:01:26.240 the goose had laid a beautiful glittering golden egg. The coaching man took the eggs to the market 20 00:01:26.240 --> 00:01:29.840 and soon began to get rich, but it was not long before he grew impatient with the goose because she 21 00:01:29.840 --> 00:01:34.320 only gave him one egg a day. He was not getting rich fast enough. Then one day after he had finished 22 00:01:34.320 --> 00:01:38.000 counting his money, the idea came to him that he could get all the golden eggs at once by killing 23 00:01:38.000 --> 00:01:41.680 the goose and cutting it open. But when the deed was done, not a single golden egg did he find 24 00:01:41.680 --> 00:01:45.520 and his precious golden goose was dead. There is something that creates value and then there's 25 00:01:45.520 --> 00:01:50.400 the thing that is value bull. And so figuring out which of the things that you have in your business 26 00:01:50.480 --> 00:01:53.840 is the goose and which of them is the eggs is one of the highest leverage things that you can do 27 00:01:53.840 --> 00:01:58.080 because then you can build towards the exit intelligently. And so in this business, I was like, 28 00:01:58.080 --> 00:02:05.520 hey man, you're getting all these people on using your systems and your processes and your 29 00:02:05.520 --> 00:02:09.680 price points. I was like, you're doing all the work that a roll-up would have to do if they 30 00:02:09.680 --> 00:02:14.720 acquired a bunch of these businesses. I was except you're doing it up front. And so why don't you 31 00:02:14.800 --> 00:02:20.880 know this ahead of time and say, hey, I want to build so that I can have the 100 or 500 or a thousand 32 00:02:20.880 --> 00:02:28.560 of my students who are using my system for doing event spaces. I should use all of those guys and 33 00:02:28.560 --> 00:02:34.720 I should set it up ahead of time saying, hey, use these colors and use these systems and use these 34 00:02:34.720 --> 00:02:40.480 price points. And in the future, if you're successful, if you're the top 10% of the students here, 35 00:02:40.480 --> 00:02:46.080 I have an opportunity where you can roll up and sell with me in a group of 20 or 50 of these. 36 00:02:46.080 --> 00:02:51.600 And so here's the thing. If that's the business model, then you can just roll up 20 to 50 every 37 00:02:51.600 --> 00:02:56.560 other year and have a massive exit while you still keep the goose that brings those people in. 38 00:02:56.560 --> 00:03:00.320 And the thing is that the goose often is incredibly valuable but not sellable. And that's what's 39 00:03:00.320 --> 00:03:03.600 that's the difficult part about this, right? And I'll give you a counter example. So for me, 40 00:03:03.600 --> 00:03:09.200 acquisition.com is my goose, right? Like, am I going to sell acquisition.com? Not really. There are 41 00:03:09.200 --> 00:03:13.760 some things that I'll talk about in a second about like transactions you can have at the goose level. 42 00:03:13.760 --> 00:03:17.440 But what really makes sense for me is for me to sell the eggs, for me to sell the subsidiaries, 43 00:03:17.440 --> 00:03:22.880 for me to sell the companies that acquisition.com invests in, right? So the big picture is understanding 44 00:03:22.880 --> 00:03:26.960 what is your goose and what your eggs. So I'll give you a different story. So I had a dude who was 45 00:03:26.960 --> 00:03:30.720 saying he had a couple Amazon stories. You'll notice his recurring theme. He had a couple Amazon 46 00:03:30.720 --> 00:03:34.800 stores and he did well with those and he sold the Amazon stores and he started teaching people how 47 00:03:35.200 --> 00:03:40.320 to start and build Amazon stores. And I was like, okay. And he's like, so I want to potentially 48 00:03:40.320 --> 00:03:44.240 sell this company. I was like, well, the thing is that this business isn't very recurring. 49 00:03:44.240 --> 00:03:49.680 It's not very sticky. It has huge key man risk with you being the face of it. Not a lot of investors 50 00:03:49.680 --> 00:03:53.840 would a want to buy it or be if they did. They wouldn't bait a lot of money for it. I was like, so 51 00:03:53.840 --> 00:03:58.480 why don't you think about a way to get all these people that you're helping start Amazon stores 52 00:03:59.840 --> 00:04:03.680 bundled together so that they become a sellable asset? Because the thing is it's like just like the 53 00:04:03.680 --> 00:04:07.600 event business. That guy had already sold three of the event venues. We know they're sellable 54 00:04:07.600 --> 00:04:11.680 businesses. They're very straightforward. They're faceless. Like they're relatively turnkey. 55 00:04:11.680 --> 00:04:15.840 Same thing with Amazon stores. Like they're faceless. Like another investor can say, okay, 56 00:04:15.840 --> 00:04:20.080 how much does it cost? What's my yield? What's my return going to be over time? Okay. And like 57 00:04:20.080 --> 00:04:25.200 these are very sellable things. And so it takes a lot less effort to take something that is already 58 00:04:25.200 --> 00:04:28.720 very sellable and just think how can I do way more of them or how can I make them bigger. 59 00:04:28.720 --> 00:04:34.240 Rather than trying to take something that inherently has a ton of key man risk, isn't recurring, 60 00:04:34.960 --> 00:04:39.200 has a lot of volatility in terms of acquisition. Like all of those things make it not very 61 00:04:39.200 --> 00:04:44.320 attractive to a potential investor. Real quick, if you want to sell your company or make it into 62 00:04:44.320 --> 00:04:48.720 a sellable business, acquisition.com just started our workshop division for companies that we don't 63 00:04:48.720 --> 00:04:52.480 own, which is just walking through the process that we do to build significantly more valuable 64 00:04:52.480 --> 00:04:56.960 companies at an accelerated pace. We have it here at our headquarters in Vegas. And so if that 65 00:04:56.960 --> 00:05:00.320 sounds interesting, you could acquisition.com, hit scale and follow the steps. And if you qualify, 66 00:05:00.320 --> 00:05:04.560 our guys will be in touch. So let's get to actual for a second. How do you figure this out with 67 00:05:04.560 --> 00:05:11.520 your business? So the first thing is, is there something that's dependent on you? If anything is 68 00:05:11.520 --> 00:05:15.840 dependent on you for the business, it's inherently going to be significantly less valuable. Number one, 69 00:05:15.840 --> 00:05:20.960 number two, is there a component of your business or of your customers' businesses that's very 70 00:05:21.040 --> 00:05:27.280 stickier recurring. So for example, gyms, micro gyms for gym launch, intrinsically, they don't get 71 00:05:27.280 --> 00:05:32.960 sold very often. So there's not a market for small service-based facilities, like personal training 72 00:05:32.960 --> 00:05:35.520 studios, things like that. A lot of people don't want to buy that. Why? Because they have key man 73 00:05:35.520 --> 00:05:42.320 risk at their level too. Whereas if I had, if I were helping franchise chains of restaurants, 74 00:05:42.320 --> 00:05:47.440 like Subway, improve their profitability, then there would be a clear exit path because 75 00:05:47.520 --> 00:05:52.080 franchise that are existing trade all the time. Same thing for accounting firms because they have 76 00:05:52.080 --> 00:05:56.000 high revenue retention. And so basically, if you look at all the different things that exist in 77 00:05:56.000 --> 00:06:00.240 your business, whether it looks at your customers, you look at different service lines that you offer 78 00:06:00.240 --> 00:06:05.520 within your business. And then the overarching business itself, one of those things should have 79 00:06:05.520 --> 00:06:12.320 some level of revenue that sticky and that doesn't require a face. And there's a lot of other factors. 80 00:06:12.320 --> 00:06:16.480 But if I had to like pick a couple, those would be two. That would be really important that I'd be 81 00:06:16.480 --> 00:06:21.040 trying to suss up, you know, pull apart to figure out what is the egg and what is the goose. 82 00:06:21.040 --> 00:06:26.720 And the easiest way to know if you're right about this is looking for M&A activity. So mergers 83 00:06:26.720 --> 00:06:31.360 and acquisitions activity for that type of business. So if you look, if you Google like coaching 84 00:06:31.360 --> 00:06:36.960 business, M&A activity, one, it'll show you how much there is. And if you don't find a lot, 85 00:06:36.960 --> 00:06:40.320 then you'll be like, okay, maybe there isn't a big market for this. Number one, number two, 86 00:06:40.320 --> 00:06:44.800 if you do find some, what is the difference between those businesses and my business? And then you'll 87 00:06:44.800 --> 00:06:49.200 be able to bridge the gap and say, oh, these are the things that these buyers like, not these other 88 00:06:49.200 --> 00:06:53.040 things. And then you can start orienting your effort and your business model around the things 89 00:06:53.040 --> 00:06:58.080 that investors have proven that they like what I don't want to go is try and sell a product to a 90 00:06:58.080 --> 00:07:01.840 market that doesn't exist. So you have to zoom all the way back out and think of your business as 91 00:07:01.840 --> 00:07:06.560 a product and an investor or potential acquire as a customer. And so somebody might listen to this 92 00:07:06.560 --> 00:07:11.120 and say, okay, well, what about Jim launch? Like Jim launch was that type of business. Well, one 93 00:07:11.120 --> 00:07:15.200 thing is that Jim launch was really dangerously close to being a franchise. And so I knew what 94 00:07:15.200 --> 00:07:19.360 franchise laws were. And so I purposely like name system fee, by the way, is what you need to be a 95 00:07:19.360 --> 00:07:23.440 franchise name as in everybody's under the same name system, everyone who's same systems and 96 00:07:23.440 --> 00:07:27.440 there's a fee associated. And so if you have all three, you have a franchise. And if you don't have 97 00:07:27.440 --> 00:07:31.680 a franchise and you're doing all three of those things, you have an illegal franchise, which means 98 00:07:31.680 --> 00:07:36.160 you're actually subject to getting sued and all that kind of stuff. And so if you're in the business 99 00:07:36.240 --> 00:07:40.480 of helping people do a specific type of business, you either have to pick name and system 100 00:07:41.200 --> 00:07:45.200 with no fee, which most people don't know, right? But you could do that. You could go name and fee, 101 00:07:45.200 --> 00:07:49.440 like CrossFit, for example, like they have a name and there's a fee, but they give no business 102 00:07:49.440 --> 00:07:54.160 systems, right? Or you go systems and fee, but no name, right? Which was Jim launch. We didn't tell 103 00:07:54.160 --> 00:07:58.720 everyone that they had to unify under one flag. Now one of my potential ideas that I was thinking 104 00:07:58.720 --> 00:08:02.160 about for Jim launch in the future was maybe I will start a franchise off the side of it. And 105 00:08:02.160 --> 00:08:06.560 with the best people, I'll plug them into there now. And that will be covered under franchise law, 106 00:08:06.560 --> 00:08:11.920 right? But the reason that Jim launch was sellable is that the big things that everybody needed, 107 00:08:11.920 --> 00:08:15.920 which is that key man was removed. So I was no longer involved in the delivery. I was no longer 108 00:08:15.920 --> 00:08:20.720 involved in the ads. I had a leadership team in place, right? All of those things, the recurring 109 00:08:20.720 --> 00:08:25.440 revenue, it is recurring revenue business. We did have relatively good annual retention of 110 00:08:25.440 --> 00:08:30.480 customers. And we had multiple acquisition channels. And over time, I grew Jim launch to be 111 00:08:30.480 --> 00:08:35.440 bigger than me at the time. And here's a, here's a nugget that people don't don't get. You see 112 00:08:35.440 --> 00:08:40.560 me now and you see Jim launch, right? The thing is, is that this dynamic of the size of me and 113 00:08:40.560 --> 00:08:46.880 audience, you know, influence now. And Jim launch, like I am bigger than Jim launch now. When I sold 114 00:08:46.880 --> 00:08:50.480 Jim launch, Jim launch was much bigger than me. And so that's the big thing that people miss 115 00:08:50.480 --> 00:08:55.120 is that like if you're bigger than the company, you will always be key man risk for the business. 116 00:08:55.120 --> 00:09:02.160 Now, in that instance, you can sell the goose if you are bigger, but you usually have to sell 117 00:09:02.160 --> 00:09:06.080 a minority. And what that means is like, people aren't going to take a risk that you're going to leave. 118 00:09:06.080 --> 00:09:09.840 But you're saying, I want to take chips off the table or I want to either fund an acquisition 119 00:09:09.840 --> 00:09:15.120 or I want to like expand in this way. And so an investor will happily bet on you by investing in 120 00:09:15.120 --> 00:09:20.400 your business. That's what raising money is fundamentally. And so if I had, so like acquisition.com, 121 00:09:20.400 --> 00:09:25.120 I probably can't exit acquisition.com nor would I really want to because I'm associating myself 122 00:09:25.120 --> 00:09:29.120 so strong with it for such a long period of time. But what I could do is I could raise money off 123 00:09:29.120 --> 00:09:35.040 acquisition.com and say, look at all of our holdings. And I'm going to sell 5% or 10% of acquisition.com 124 00:09:35.040 --> 00:09:39.600 at a monster valuation so that I can either take chips off the table if I wanted to or more realistically. 125 00:09:39.600 --> 00:09:44.240 I would say, I want to go buy this massive company. And I want investors to help me do that and 126 00:09:44.240 --> 00:09:48.400 look out it will add value to all the other holdings that we have. So we'll get a disproportionate 127 00:09:48.400 --> 00:09:53.760 return on it. That me doing that isn't really an exit. It's a transaction or liquidity event. 128 00:09:53.760 --> 00:10:00.480 But it's not me leaving the business. Like you look at beast industries with Jimmy, Mr. Beast. 129 00:10:02.000 --> 00:10:07.440 He's raised at the whole co-level. So that means that the beast burger, the software he has, 130 00:10:08.000 --> 00:10:14.000 feastables, all of them are under that big thing. And so he's not. He can't exit his YouTube channel. 131 00:10:14.080 --> 00:10:18.560 But he can sell a portion of it to fund more growth, which is what raising money is. And so he's 132 00:10:18.560 --> 00:10:23.760 to be able to do that. If you look at, um, look at Elon, right? Elon is inextricably linked with 133 00:10:23.760 --> 00:10:28.240 the companies that he has. And so his way of doing that is like they're mostly public companies 134 00:10:28.880 --> 00:10:35.520 with the exception of SpaceX. And so by doing that, the public participates. But he's not leaving. 135 00:10:35.520 --> 00:10:40.880 He's the owner of the business. He's still running the business. But he allows other people 136 00:10:40.880 --> 00:10:45.280 to participate in the growth of the company overall. So back to smaller businesses. 137 00:10:45.280 --> 00:10:50.880 So I had a media company that reached out to me and was like, Hey, I'm trying to figure out 138 00:10:51.920 --> 00:10:57.120 like how I structure my media company to become sellable. He had a number of stars or talent 139 00:10:57.120 --> 00:11:02.400 in his, in his kind of like stable, right? And so if you're in that business, you basically need 140 00:11:02.400 --> 00:11:07.840 to pick one of two directions. So either you get all of the guys in the stable to support a product. 141 00:11:07.840 --> 00:11:13.440 So they'd be like, Hey, this is our hair gel. This is our dip. This is our whatever, right? And 142 00:11:13.440 --> 00:11:17.920 ideally you want that consumable to be a recurring thing. Something that, and when I say recurring, 143 00:11:17.920 --> 00:11:22.480 it doesn't have to be recurring, but it can also be reoccurring. Meaning, uh, if I use 144 00:11:22.480 --> 00:11:26.080 hair gel, I might not want to have a subscription for it. But if I, when I run out, I buy more of 145 00:11:26.080 --> 00:11:32.640 the same thing. Like I'm not a recurring subscription for Coca-Cola products. But I do buy Coca-Cola 146 00:11:32.640 --> 00:11:38.000 stuff on a reoccurring basis. And so if you get enough exposure, then people will buy that, 147 00:11:38.000 --> 00:11:44.800 right? And so the idea here is that for him either has to have a product or he sells advertising 148 00:11:44.800 --> 00:11:49.760 space and the impressions that he's able to consistently generate become the product, right? 149 00:11:49.760 --> 00:11:52.400 Like so if you're a media company, it's one of those two things. You're either, you're either 150 00:11:52.400 --> 00:11:57.440 pushing all of that, those impressions that you're getting from your stable into one product 151 00:11:57.440 --> 00:12:01.920 you own or you're saying, I'm going to let any advertisers come in as long as it makes sense for 152 00:12:01.920 --> 00:12:07.440 our brand or the brand of the talent to place ads on their, and I'm selling media space itself. 153 00:12:07.440 --> 00:12:12.400 Those are the two ways that that business would work. Now, if he wanted to exit that business, 154 00:12:12.400 --> 00:12:17.040 he can't exit the stars. The stars would generate the impressions. Now, if he's not a star, 155 00:12:17.040 --> 00:12:21.760 he could exit the business if he has the stable of stars and he's selling advertising space. But 156 00:12:21.760 --> 00:12:25.760 if I were him, I would say, well, I would rather just have this incubator where I could just blow 157 00:12:26.720 --> 00:12:31.680 up products and again, which one's the goose, which one's the eggs? In this instance, having all 158 00:12:31.680 --> 00:12:37.040 this massive media and impressions and whatnot, that's the goose and then the eggs would be the 159 00:12:37.040 --> 00:12:41.360 products that we sell through that distribution. Now, using the strategy I was saying before, 160 00:12:41.360 --> 00:12:45.760 he could raise money by saying, I'm going to sell 10% so I can front all the capital for this 161 00:12:45.760 --> 00:12:49.440 massive launch because if you have a ton of impressions, this is one of the big issues that a lot 162 00:12:49.520 --> 00:12:54.720 of creators have is that their impressions and their fame far surpass their wealth. 163 00:12:56.320 --> 00:13:00.560 In order for them to accommodate the demand that they have, they'd have to basically have a ton 164 00:13:00.560 --> 00:13:08.080 of money they don't have to buy in inventory and get logistics set up and all these other things 165 00:13:08.080 --> 00:13:12.720 up front to do it right because you want to do a good job because you can only have one reputation. 166 00:13:12.720 --> 00:13:17.120 And so they have to front all this stuff and if you don't have money, it gets very hard. 167 00:13:17.360 --> 00:13:20.960 And so that's where sometimes having, like you're not exiting your brand before you have the product, 168 00:13:20.960 --> 00:13:24.080 you take a tiny bit, you give it to somebody else so they can bet on you and then you can put 169 00:13:24.080 --> 00:13:28.640 that money towards something that will make everybody more money. Now, I'll give you a fourth 170 00:13:28.640 --> 00:13:34.160 example of this. So I added an accounting firm, kind of like coach, consultant, whatever you want 171 00:13:34.160 --> 00:13:37.920 to call it, reach out. And he was like, hey, I'm trying to think about the ultimate version of my 172 00:13:37.920 --> 00:13:42.480 business. Now his business was a business where a role it made a lot of sense because there's a lot 173 00:13:42.480 --> 00:13:47.360 of M&A activity in the accounting space for a variety of reasons. But one of them is that 174 00:13:48.240 --> 00:13:52.080 the book of business is just worth a lot of money. There's usually high-grows margins or net margins 175 00:13:52.080 --> 00:13:56.800 in the business. It's incredibly recurring and sticky like people don't normally switch who 176 00:13:56.800 --> 00:14:01.440 they're doing their taxes with year to year to year. And so they have massive LTVs. The hardest part 177 00:14:01.440 --> 00:14:05.360 of the business is acquisition is getting customers, but keeping customers is actually not too 178 00:14:05.360 --> 00:14:09.280 difficult in that business as long as you do a good job. And so he was like, how do I sell my 179 00:14:09.280 --> 00:14:13.440 accounting firm coaching consulting thing? And I was like, well, that's not what you want to sell 180 00:14:13.440 --> 00:14:18.960 because no one's buying that. But what people are buying is accounting firms in glob together. And so 181 00:14:18.960 --> 00:14:25.440 the top version of your business is having a roll up of 10, 20 accounting firms that you can exit 182 00:14:25.440 --> 00:14:29.440 every one or two years and exit for a hundred million bucks or whatever. And you take your slice 183 00:14:29.440 --> 00:14:32.480 and you say, hey, I'm the one who's putting this deal together and I get 20 percent, I get 30 percent 184 00:14:32.480 --> 00:14:35.520 whatever. And if you're thinking about this and you're like, well, why would somebody give up 185 00:14:35.520 --> 00:14:40.320 that kind of percentage? Well, here's how it works. So when you buy in bulk, right? When you go 186 00:14:40.320 --> 00:14:44.720 by toilet paper or Costco as a consumer, when you buy in bulk, you get a discount like the more you buy, 187 00:14:44.720 --> 00:14:50.240 the less you pay per roll. That makes sense. What's interesting is that in investing, it's a volume 188 00:14:50.240 --> 00:14:55.840 premium. So basically the more profit you have, the bigger the company is, the bigger the roll up is, 189 00:14:55.840 --> 00:15:01.280 the more you get per. And it's because big money is lazy. And so they will pay a premium to not 190 00:15:01.280 --> 00:15:05.200 have to do as many deals because deals or costly costs a lot of time on extension. And so if you 191 00:15:05.200 --> 00:15:09.120 have to do a hundred deals versus doing one deal, you'll pay a premium to only have to do one deal. 192 00:15:09.120 --> 00:15:15.680 And so if those individual accounting firms could sell at call it four times earnings on their own, 193 00:15:15.680 --> 00:15:21.600 right? If they can sell in aggregate together for call it 12 times earnings, then even if they give 194 00:15:21.600 --> 00:15:28.080 up 30 percent of the 12x, they're still double as good as they were before. And so everybody wins. 195 00:15:28.080 --> 00:15:32.320 And the thing is is that I spend a lot of time trying to find those types of situations in business, 196 00:15:32.320 --> 00:15:36.720 where it's like literally everyone wins is like, if we work together, rather than be competitive, 197 00:15:36.720 --> 00:15:40.160 if we can collaborate. And I'm telling you, all the guys that I know who make gobs and gobs and gobs 198 00:15:40.160 --> 00:15:45.680 of money, like, it's so rare that you're actually competing against people. Like I used to say this 199 00:15:45.680 --> 00:15:48.800 in the weight loss world, I was like, we're not competing against each other guys because I had 200 00:15:48.800 --> 00:15:52.320 obviously a big community of gym owners and we had tons of gyms there on the same market. I was like, 201 00:15:52.320 --> 00:15:56.640 guys, we're competing against the couch. Like we're competing against Netflix. We're not competing, 202 00:15:56.640 --> 00:16:00.960 like we're competing against chocolate. Like we're not competing against each other, right? Like 203 00:16:00.960 --> 00:16:04.880 it's only like, I think it's like 11% of Americans like have a gym membership. It's still a tiny 204 00:16:04.880 --> 00:16:09.360 percent of people who go to the gym. And that's have a membership, not even use their membership. 205 00:16:09.360 --> 00:16:14.000 And so I mean, just look at how many fat people there are. It's not like the problem doesn't exist, 206 00:16:14.000 --> 00:16:18.000 right? And so people get really obsessed about their competition rather than just thinking, okay, 207 00:16:18.000 --> 00:16:21.520 how can we collaborate and we can all get better? Because the thing is is that the private equity buyer, 208 00:16:21.520 --> 00:16:26.880 the ultimate person at the top of this food chain who aggregates, fragmented industries, 209 00:16:27.920 --> 00:16:32.480 those guys don't think like small business owners. They just think, oh, this is really 210 00:16:32.480 --> 00:16:36.720 fragmented. I'm going to roll all these together and make a much bigger thing. They don't care 211 00:16:36.720 --> 00:16:40.720 that you have some sort of animosity because they just remove both founders who have egos and say, 212 00:16:40.720 --> 00:16:44.720 cool, these two work well together and I can see some synergies in terms of costs and I can get 213 00:16:44.720 --> 00:16:48.560 more profit and own more of the market. They just don't think about it like that. And so all the 214 00:16:48.560 --> 00:16:52.800 richest guys I know are just like like it's so funny because there's these these these blood 215 00:16:52.800 --> 00:16:57.600 feuds that exist between businesses that are local. But like the guys who you eventually sell to, 216 00:16:57.600 --> 00:17:02.000 if you succeed and do a good job with it, those guys don't care at all. And they just roll 217 00:17:02.000 --> 00:17:05.920 everything together anyways. And so we have this whole obsession about like competing. But like 218 00:17:05.920 --> 00:17:08.960 the reality is that if you collaborate, you end up making a lot more money. I'll tell you 219 00:17:09.600 --> 00:17:13.200 another quick example on this. So there was a dental association that we were looking really 220 00:17:13.200 --> 00:17:18.880 heavily into. So they had like 700 dentists that were in their association. And dentists have to 221 00:17:18.880 --> 00:17:23.600 buy like floss and toothbrushes and toothpaste and whatever, you know, other stuff they need, right? 222 00:17:23.600 --> 00:17:27.840 And so they spend like 20, 30,000 a year on kind of like consumable products that they have to use 223 00:17:27.840 --> 00:17:32.400 in their practice. And so what they did was they did a co-op in terms of group buying. So they 224 00:17:32.400 --> 00:17:36.160 said, hey, let's all come together rather than be competitive. Let's collaborate and let's buy 225 00:17:36.160 --> 00:17:41.040 together as one. And by doing that, they're going to negotiate a big discount in rates. And so the 226 00:17:41.120 --> 00:17:45.600 discount that those guys would save in buying together exceeded the cost of the annual membership, 227 00:17:45.600 --> 00:17:50.640 which by the way, brilliant model. And so like as long as you plan on being in business, 228 00:17:50.640 --> 00:17:54.480 why would you not want to have a savings that's an excess of the cost of an association? Which if 229 00:17:54.480 --> 00:17:58.880 you ever have the opportunity to do that, like I said, great model, especially in a niche. And so they 230 00:17:58.880 --> 00:18:04.240 they did exactly what I'm talking about is that he took the top, you know, 11 of the dentists 231 00:18:04.240 --> 00:18:09.360 rolled them up and they sold it for 120 million. But the PE group, damn them, it was extra smart. 232 00:18:09.360 --> 00:18:13.760 We were bidding against them for the business was like, hey, you know what, we'll buy your 233 00:18:13.760 --> 00:18:18.400 business too while we're at it because we'll buy your goose and the eggs because they all they 234 00:18:18.400 --> 00:18:23.120 saw was, wait, you have 700 other dentists in here. Well, that's our that's our egg pipeline for 235 00:18:23.120 --> 00:18:28.400 the next five years. And so they're just like, cool. So we'll do this roll up and we'll pay you a 236 00:18:28.400 --> 00:18:33.680 premium on your revenue, which was actually fairly recurring to be in defense of this business, 237 00:18:33.680 --> 00:18:36.800 which is again, why it was sellable because they just knew that they're like, okay, we'll do this 238 00:18:36.800 --> 00:18:41.280 roll up, but next year we'll just grab another 20 of them or another 50 of them and keep adding it 239 00:18:41.280 --> 00:18:45.120 together. And so the thing is is that the most valuable version of that business wasn't actually 240 00:18:45.120 --> 00:18:50.640 that business. It was the eggs of that business. And so making sure that you understand which is the 241 00:18:50.640 --> 00:18:55.200 goose and which is the eggs for the business that you're building will allow you to build a much 242 00:18:55.200 --> 00:18:58.160 more valuable enterprise the right way the first time.