Asking 3 young millionaires how they make $1.8M, $5M, & $12M/year

alright today we're playing shoot your shot where we let founders come in sit in the hot seat and pitch us their business we got founders that have million dollar businesses all the way up to a hundred million dollar businesses they get fifteen minutes and in it they start by telling us the one big number give us the pitch and and shoot a shot i could ask any questions that they want yeah we've done this in new york city this time it's in san francisco whether you're listening on spotify or youtube if you're working out right now whatever you're doing right now you need to stop and go to spotify or go to youtube look us up on my first million and let us know in the comments of which city you want us to go to next alright let's do it i feel like i could rule where to i know i could be what i want to put at all in it like a days off on a road less travel a the alright you wanna be the first guy out out what's who's going nick you what's good hit us with the big number alright so i'm running a backup generator company in ke okay we're in about twelve million in arr right now wow and we've got line of sight to fourteen million this year and contracted to go out to around twenty five okay so the the big number is twelve million in revenue and yours what are you providing for people use you provide backup generator sales and service so what does that mean like i'm a house home i'm a homeowner owner out here that's right yeah would just buy a unit i rent unit or are you sell a power company sell generators they generate service generators we typically do higher end units our clientele are typically the like high end of state properties as well as large more regulated facilities so every telecom tower every nursing home every police station fire station gotcha every data center so it's b2b to b mostly b2b to b we will in in the product at the high end estate properties get that's a it's an industrial across all these businesses that as soon as somebody says them i'm like oh of course yet they've been a complete blind spot to me my entire life i've never thought about it once and i was wondering how did that guy start thinking about this so how did you realize this is a business i could go be so i started my career in management consulting where you double around a bunch of different industries at one point i landed in a corporate job at nr energy large power company in the us was doing innovation projects there strategy and one of the areas we had the hardest time finding good expertise in was backup generators and a backup generator is if your power goes down for one minute or twelve hours because of a storm or an or earthquake or something this thing kicks on yep good to go you do not want the power to go out when you're on the surgery surgery table unless there's a backup generator there to cover great and so every surgery center every hospital they've all got them once you start the company so i acquired the first one and so this has been an acquisition venture it started with a thesis went around looking trying to find us a service provider to buy we bought our first one in january twenty twenty four and then bought a second one about five six months later and describe the industry so is this a bunch of mom and pop companies a few large players like what does the even look like so very bar so you've got we go head to head up against big big industrial names like caterpillar and cummins and gene on the direct side where we're competing for the business of you know marquee names big counties big state state contracts and things like that we also go head to head against the small mom and pop players but really the the lion's share the market is owned by the the bigger platform so you did a search you've quit your job into search you search on side which you do so this was actually this is my third search venture i had done my first one was an office plant company oh what an office plant company plants yep like and yep probably possibly those how that go that that's still own it you own it bought it in twenty seventeen we've done fourteen acquisitions on that platform hold on how much revenue does that do that's our antenna what you it not outright me and my partner yeah officer how much eb a little over two was that a thesis or that was i stumbled into a guy who owned the plant that was failed venture back startup there's gotta be an easier way to make money sitting on my couch cruising biz by sell in the way that a lot of people do with zillow instead of you had of of a venture company that failed yep and so you were like management founder but you were like a management consultant nerd you're just like an academic totally like here's your board deck yeah you're like alright now i need to get after it so this company it failed now we're gonna get the plants yeah okay i something we bought it with an sba loan it was like the polar opposite of what i had been doing throughout my career which is a mix of like management consulting boardroom fortune five hundred type of stuff and venture back startups and i guess there's a third leg to that which is what world you did plants than what we carved out a portfolio of commercial landscaping contracts in that plant business and sold that to private equity how much do you sell for just a little over million okay so that was the what it was it was twenty percent of my cash flow and like eighty percent of my headaches that freed me up because i was like the biz dev guy i was finding the plant acquisitions i that business i built it i bought did the first acquisition i did four out after that and then i kinda hand it off to my partner to run data you like doing the search the the business and you like doing the m and a you have a partner who does operations or yeah that's right how much did you raise for this third business so what's a call that's called on point on point so this is the first time we raised outside money because we felt that given where the macros were in terms of electricity demand booming data center market booming you know electrical contractors booming we felt like to meet the opportunity where where it was gonna be like we needed to raise some outside capital so we brought in six and a half million we did a significant chunk of it but there's you know about five million of outside investment in this one and how big is this gonna get i don't know yet i think this business this can get really really big hundreds of millions hundreds of millions i think we can get to we're the question will be it's really revenue throughput do we have the technicians to pull off the work i've got the work contracted it's pure it's purely an execution game at last point and so describe you said you go against caterpillar and these other larger players what what axes do you need to compete on is it price is it yeah what what what how do you win the pitch a hundred percent speed they are slow they're good at what they do but they're very slow what's the speed difference how long there's how long for us and and ai has been an absolutely like central part of our strategy of speeding up every single process in that business i need to be able to deliver a quote while my guys there these are complex machines with a very difficult parts supply chain it can take weeks to turn around a quote from a hey your generator broken to hey here's what it's gonna cost me to fix it and when we can do it it's very very slow business and it's very very difficult because of all the research and tribal knowledge and it's you know spread speed up that quote if let's say the guy standing there yep understanding what's the issue yep is he inputting something on his phone and he's getting what and we've done all the back end work of every document that we have ever produced as a company has been ingested and studied by ai we've built it reg retrieval augmented system so that we can do research on the fly and produce answers on the fly this is great so there's companies i've got a friend that owned to hvac company and it does close to in revenue and he was complaining and lament overall my business sucks for this reason his you know you're stuck for that reason and he was and he was telling me like he was like well we just have to get better buying google adwords and and he was like the demands there like i just had like operate and i was like so en of that because that's not what i have i've gotta like teach people what it is and whatever are you in the weeds of training people or is your personal job just finding who else you're gonna to buy so we've kind of put a pause on m and a right now we're really trying to nail the operational workflows and that's what you're doing ai support and i'm just doing a lot of the building pain in the ass to train these technicians i'd say it's more than a pain in the ass it's impossible like this is very varying or finding them which with both because a there's not enough of them those that exist are on their way out not in and who is they field technicians i know but what what do they like are they in the same category of an hvac person where like if you give me eight weeks of your time i could teach you how to do this but it's hard to find someone who's willing to do it i'd say not far off of that okay it's mechanical it's electrical and it's both and usually very you guys are good at both it's increasingly instrumentation and controls so there's more computer and like troubleshooting diagnostic much does a field technician make is this like a job that people are gonna want because it's pays really well this is a good job this is an opportunity where the elite field technicians they will clear well into the six figures a guy with a high school education but it takes time to accumulate the experience and you don't see a lot of generators so experience accumulate slowly even in hvac you might do you know three four service calls a day our guys are doing one or two service calls a day consequences are massive the consequences are massive how big the average contract hey i wanna tell you about something pretty cool we have a database of all of the business ideas that have been discussed on this podcast so hundreds of episodes the team at hub hubspot went through they pulled out all the simple relatable interesting profitable ideas that we have brainstorm and they're all available for download for free just click the link in the description below thank you to our friends at hubspot for sponsored this podcast and putting together this free resource for you guys back to the show how big the average contract it varies tremendously depending on whether you're dealing with you know a three megawatt unit at and aws data center or a you know frank and shirley generator in their backyard for the you know data center units you're probably talking twenty five thousand a year in service revenue and is there ever churn there is but generally they kind of want accountability on the vendor and so and that is one thing that's hard about competing against caterpillar right like the the facility is guys like well a hard caterpillar and they couldn't figure it out so right so so let me make sure i understand it sounds like you do you sell the generators but you service and i would guess servicing is more than new new sales yeah and you get brought in directly by the facility or by the guy whoever the company is that made that they ought they put service they need service technicians out and field everywhere so they sub contract out to you so we're an independent so we have to we have to eat what we kill basically so go straight to the we gotta go straight to the facility we can work through the project through the facilities operations companies like the jl ls and cb e real estate and now you're you're saying my biggest bottleneck is i gotta get enough technicians to be able to service the workload that we have how you gonna solve that problem so we're still figuring it out we've got recruiter you you know we've got every recruiter spun up sending us leads k some of it is like you can pay to bring guys here will they stay here open question i'd say we can find the guys who says that he knows how to fix those things can we select for the guys who actually know how to fix those things that's i think we've had a harder we've had an easier time finding people and getting them in the door installing them on joining our company then we have had being damn certain that when that guy shows up there he's gonna find the problem and fix the but what did the like we this the second number mentioned them but like you know tommy mellow the a one garage door guy here today okay yes and then there's like tons of these like influencers who are legit business guys what have they done to like because they have all had the exact same thing where they're like you know garage doors like a lot of the people economy are kinda like problematic and i gotta teach him how to like i think he said he's like we teach him how to like pet the dog you pet the dog right when you come in you ask may i he this like sales excellence yep but it's still he needs the technicians to go do the work one of the things we always talk about is like as an entrepreneur is easy to feel like i have this this problem this burden and it's like unique to me and it's like very few problems in your business haven't already been solved by somebody else so the easy thing to ask who else is solves this problem and how how the heck they do it so he's saying how do heck did the garage or tech how do the garage companies yeah get a scale up their technician force who do you look at that's already done this so you basically have to start a trade school you are the trade school yeah you have to bring somebody who i'm referring to he has hoffman university you have to have you done that not yet we're not big enough to do it just yet we're working on building our shop building we have a third bay in our shop that is the training bay and we've handed our lead technician you know an assignment to we gotta build out our own training capabilities we've built the digital side of it so turning every job we do into a training experience that can be relayed under the team because i need the guys to get more than one rep a day right i if i can turn every rep we do that day well how do you do a bunch of rep how are you turning it into like a simulation so as guys submit their field reports we have a pre job briefing so we prepare these guys to go out to the field like their cia and being dropped in deaf afghanistan right here's everything we know about this unit here's everything we've never seen like they play on their phone they can listen and hear hey this is what i'm this is what i'm facing and so and that's the ai side then they do their report and they document their findings in their report and we've got a pretty slick data collection process where they can use their voice to produce their report we've got ai reading everything that they do everything that they say and then at the end of the process when they submit their report we will flag the reports that the best training material when you're laying in bed at night and you're thinking if we can do this this and this maybe in five years we could sell or maybe i can have this much annual income or like whatever that number that that vanity thing is for you what is that man i think for me financial is my third time around and i feel like i'm doing this because i chose this i wanted to be doing this so it's kind of about like what are all the cool capabilities that we could build that have never been possible before okay and it's beef specific though when you're like when you're thinking about this year like what does that like what really gets you going i think making like really great jobs for these trades men helping them like ordinary people achieve like really really extraordinary performance yeah i'm like super excited about what we're gonna be able to do and like how we're gonna be able to empower people who have never really worked for a company that gave a crap that much about the process there was this really cool company i forget the name but they took out an ad in the wall journal in new york times there's some huge national publication and they played off this idea of like you know how like your grandfather walked me around the city and he's like you see that building i made that you know and he was just part of the construction crew or like you know look about fifty years ago we installed this thing because here and there's like this pride and the ad that they put out because they were trying to recruit people is do you really wanna brag to your kids that you made b software just a little bit better you know something like that and like i wonder if there's like some cool like mission driven like angles that you could take to this like recruiting because when you talk about like i'm passionate about giving like everyday guys like a chance like do something interesting no it's an interesting idea and i think there's definitely a point of pride over oh we work on you know good it's kind of fun too because we work on a lot of high end properties so these are like you know lifestyles of the and famous type of stuff where we work on those properties we put those generators in and the mission critical hospitals whatnot yet and that right there's such an important duty seems like like i coached high school basketball this year and our star player it's power forward because graduating we're were like do you wanna go play in college we can get you in front of some scouts and he's like i'm going to trade school he's like i'm not gonna the trade school doesn't have a basketball team he wanted to go work for you know he wanna become like an electrician but but like feel like crazy stuff like hanging out of a helicopter doing some repair and some crazy site and it made me realize you know there's probably a lot of people who are like have the talent you know whether it's veterans whether it's ex athletes they kinda like the idea of doing certain types of work getting paid really well for it not having to go to a four year university and i wonder how you can surface more of them faster or where they're going today that you can tap into that flow i think the stigma of the trades has gone i think that is behind us like the things that we were told when we were you know coming up like know you gotta go to college but make sure it's a good one yada i think that there's some of that's still there but like i think the stigma of going into the trades is behind us and now it's like this is the opportunity for the trades you craft to shine right and we're trying to give them the tool so that they really can and so that they can grow faster learn faster well nobody's built a great brand around the trade school right like now is there a what's harvard what stanford for for that like where could you be proud that you got into that you're going that you're coming out like a navy seal who's gonna be able to do all these amazing things that to me even big opportunity than what you're currently doing because that's like a hundred and fifty two thousand dollars yeah it serves all kinds of industries you know and there are some they're really niche right you know and they're they're with that specific trade yeah and so it's there's not like a big one that everybody would know oh that's the stamp of approval but there's not a harvard of the trades in general which i do think there's like an excellent yeah and i would love to work on that i feel like right i'm working toward that and i need to understand it at a level of depth and have solved it for one quarter of the universe so that we could think about okay what what how would you next level this thing you have very kinetic and contagious energy now i i have a feeling that in the next four or five years you're gonna be significantly further along than where you are now it's very it's an amazing space and it's so cool you we had a guy the last guy was like a franchise guy and you're you'd you're doing entrepreneurship through search and acquisition i just love all the different styles so i i appreciate you coming on man yeah thanks having alright appreciate you thank you sure hey let's take a quick break you know that feeling when strategy is done the brief is written everyone's aligned and you realize someone still has to sit down and actually create all the content that someone is usually you and it's due tomorrow well the breeze assistant from hubspot can help it works right inside hubspot you can draft campaign copy blog posts emails all in your brand voice all using your actual customer data so you don't create just content you create content that converts check out hubspot dot com the agent customer platform for growing business we have someone else welcome how's it going good excellent posture yeah oh yeah i yeah you scream good to work on it yeah look at this guy do that hope my game bit here yeah thank yeah what's your name what's up guys kevin kevin yeah welcome thank you welcome to shoot shot hit us with the big number to start so big relative my number is one point eight million my i think i'm a little unique with this setup because i actually just sold my business about two three weeks ago nice and i sold it for starter business on the board wait so you are just exited at one point just exited at one point yeah what did you sell for one point eight million dollars it was a franchise business called smash my trash smash i've heard of this have you heard this know what does smash my trash explain so the basic concept is companies that produce a lot of trash industrial businesses warehouses factories things like that throw away a lot of stuff in these open top dumpsters that are these rectangles that hold like forty cubic yards of stuff the pricing model is that every time you fill it up and you need a new one you have to get it replaced and that can cost like a thousand dollars yeah i used to like get on top of ours and like jump up into that's it imagine so you imagine from giant thing came and smashed the trash down i thought i was gonna like higher subway to cover gel out the trash for me that was it no so we have these trucks that back up to the dumpster like you said sean there's a crane on the back with this spinning spike yarn that goes in pushes the trash down the deal is basically let's say you get ten pickups a month a thousand bucks that's ten thousand dollars a month you're spending on trash we'll get you down to just round numbers five and we'll split the savings with you wait so one a a large company will spend ten grand a month in trash yeah more who like a warehouse big factories production facilities in like agricultural california is where i was doing a lot of work wow companies that just these are like you just go to the parking lot there's a huge dumpster back there that's that was the opportunity that's the opportunity is to smash the trash down so you have to do less pickups per per thing because you're paying per pickup up that's it and do smash smashing trucks exist already it was the concept so it's a franchise the guy came up with the idea started growing fast decided to franchise it so these didn't really exist they exist in europe but they're like mounted to the side of the building so those companies would back the dumpster up so the insight was throw these things on a truck have them drive around and do it as like a mobile bought a franchise and and then now sold your franchise correct one location how many five locations five locations how much did it cost to buy in i bought it in chunks so my i think my buy was like a hundred eighty five k upfront upfront and then i how did you have money before i worked in tech i was like somebody worked in saas and had like we did my two sales or what were you doing yeah i was like sales and product and stuff like that like the kind of classic bay area w two thing so this is so interesting so you're just sitting there at the office you got a good job you're working in tech and yet you're like i need to get out there amongst the trash what was the what was the chain of events that led you to like quit this safe thing and go buy into a smash my trash franchise yeah a couple of so it like growing sense of dissatisfaction i like i kinda started realize late in life that i wanted to work for myself and i was also like in this venture world where you're like going after like the next round of funding this eventual exit and i didn't i was like blind to the way that a lot of the world worked in terms of like cash flowing blue collar businesses and i started to get bit by that bug a little bit like i started hearing stuff about that and i got interested and then it was really when i got married and went on my honeymoon and i waited till like the last minute to book our honeymoon so we stayed at places that like we probably shouldn't have gone to that were nicer than we otherwise would started talking about start talking to people there at the pool and stuff i mean like no what there's college guys are trash yeah people make cash doing businesses that are off the beaten power remember what were they what were they saying what do they do so one guy i did like real estate one guy i did like a food truck but like dead like a food truck like as a serious operation like had many of them i'd also had the seed planted on my bachelor party i was there with my friend who was in private equity and he actually got and smashed my trash before me gotcha so he planted the seed here's was a private equity guy of the of the one eighty how much of was that a huge chunk of your savings i did eighty five myself a buddy gave me seventy and then so that was like the equity and then i did a three hundred fifty thousand dollar sba but were you well were you like does how work this has to work or was this like a safe like i'm putting a small amount i'm i'm heading i felt like a pretty safe side bet i had more than that that i would have been able to but it felt uncomfortable okay so you you decide to go in and you buy one what happens so actually bought three out of the gate okay i bought i bought three territories out of the gate now territories in franchise world like a lot of times people picked up restaurants where like it's clearly a unit this is area so i mean it's really one business the areas are a little arbitrage many years ago was this in twenty twenty two i got started okay so four years four years ago so got started and part of the reason i got into it was i was interested in something where i could draw a direct line between like brute force effort and cash in the bank i felt like in tech world i was so many layers abstract away from like like warm bike metric right brute force to cancel exactly so what do you mean you just meant like if more people i call the more money i'm gonna make right like i added this no brainer offer i had these people who definitely could use this and one hundred percent could make money and all i needed to do was go get them to believe me yeah and i could just start making cash and it wasn't like this promise of some future outcome and i found that really motivating okay so i paid somebody overseas to like zoom in on google satellite view and put pins on every dumpster k and like that was my plan and i would drive from walnut creek down to you know san jose sal like hour and a half two hours each way every day and just like tres go into warehouses try to talk to like the person there who's in charge of the dumpster right and just kinda will it into existence started driving beyond the con my man you go you drive okay contractor gives you a a pin you drive to the pin you get there you weren't invited knock knock now what so not even knock knock drive pin right around to the back where the dumpster is okay my i saw i built this up over time i've learned yeah you don't wanna go to the office because the office there they're gonna you know they're gonna tell you no so what i would do is i had a red hard hat that i would put on get the clip go right walk into the back and try to find the person who's physically loading the dumpster you got the red hard hat on start asking questions most the time they would just they jared there's no construction out here you're you're the trash contractor for the company right there you're just not sure they're just like this guy's asked me like how many pickups do you get who's in charge of it i start to kinda size the account gets some info and then i would go to the front armed with info and then i would you know work my way to the decision maker how many months until your first dollar right away right away in the first how thrilling was that first sale oh it's great i was great i was like out with our neighbors when they first because these are like kind chunky contracts we're talking about like large i mean for me at the time you know couple thousand bucks a month recurring revenue so it only took two three four accounts to basically pay my debt service and my driver you had a driver the bat i hired a driver right off the bat yeah and did smash address give you this playbook or you were just like i'm gonna a red hard hat this or they were like hey here's why you do it they didn't tell me about the red hard hat but they gave you the basic playbook and then i before i opened went around to a couple other franchisees including my buddy i mentioned and just was like show me everything how do you guys do it what works it's sort of like have you ever seen those videos where someone's something my friend neville maduro he's an indian guy and during south by southwest every year he dresses up like a chic like he wears like a white big one hat that he just like i get it and then there's like these instagram videos of guys feel like they're like i'm just gonna like look like a dj whatever that means and then they you get to the club that that's like this version of that exactly people don't ask questions so you this is amazing okay so you said you sold the business now year one do you remember kinda like what was the p and l like what'd you what'd make in first year business it's hard to say i because in the first year i bought the two additional franchises so one day i drove beyond the bounds of my territory and i found like the trash gold mine and i bought those two franchises and bought two more trucks okay so all the cash went right back in were all three territory successful or one sucked but another one was amazing and i made up for it that was kind of it there's a great one there's okay one there's a medium one then i added on like these two amazing ones so i had to buy two trucks had to buy two new territories so all the cash went right back into that i think i probably did like six to eight hundred k of top line in those first two years wow what was the biggest pain in the ass looking back the trucks the operators or not even the operators fixing the trucks when there's issues was something i just don't it's a big truck with hydraulic equipment and i eventually just kind of adopted the philosophy that like item mechanic he was gonna charge me what he charged me and i he was probably over charging me but when there was an issue i would just over pay for it you didn't have like a lot of like shopping around you could do for smash ching yeah i just wanted to get it done like a lot of our accounts they're paying us a lot of money every month and if we can't get to them i just was willing to pay a lot to just solve that problem and have it not be something we deal with so how much profit how much take home income did you do your last year so it was kinda like the first two years in the last two years was were very separate chapters first two years i was down there every single day not taking anything out reinvest everything into new trucks and new territories the last two years basically twenty twenty four to twenty twenty six summer it was like maybe around like four fifty eb if you wanna call it that but a hundred fifty k that was debt service so really my take home was like three hundred k so why cell it was you know it just it felt like a starter business it was always kind of my starter business i got into it because i thought it would be like this direct line it just weighed heavily on me in a number of ways like won these loans and i got loans for the second two trucks so this is that first three hundred fifty k sba loan i got subsequent loans for the other trucks so that's a personal guarantee yeah in my head every day right the a lot of people don't realize franchise agreements also have a personal guarantee where you owe them royalties every month as a percentage of revenue i think most people know that with franchises but there's minimum royalties which means you either pay some percent of your revenue or this fixed amount on a schedule whichever is higher and that's a ten year long agreement that also has a personal guarantee so i felt like i could handle that but that's like also weighs on you and just like having these big trucks know every day we're like couple times a year i'd get a call it was like something bad happened what it what did it feel like when the wire hit it was kinda anticlimactic a little bit so i had already like i'd worked with my accountant i'm like alright tell me like after tax after everything what the number is i'd like seen that number in a google sheet and then when it happened i was very happy my wife and i like we had a trip just coincidentally planned for to go somewhere to the next day so we did get to enjoy it but now it's just like back to baseline kind of right i feel the relief of not having like the responsibility and like i run my phone on me right now i'm used to like you're walking out you're rod dogg no phone right now no phone what i've saying is normally i would be trying stressed out in the way i could go back and there could be just like a bomb dropped on there on my phone where you know something went wrong who bought it was it just somebody else who wanted even more territories or was like who who's the that it was a neighboring franchisees so it's a great thing where you know i was happy with the amount they paid i think they're gonna they got a great deal on it for them because they're just to be able to fold it into their thing right tell a lot of franchise m and a ends up happening i have a feeling that you're plotting you have something that you've been that you've been thinking about what is this what are the list of things and also did you know what that was before you sold or the space gave you the time to figure it out so the first two years were dead sprint the last two years i've got it in passive mode i had two kids and so i wasn't able to go down there every day so i did a lot of stuff to make it like truly passive and i spent a lot of that time trying to figure out my next move i don't wanna say too much about what it is but i do have something in the works what other opportunities did you consider doing that you did not so what i got really interested in was like this concept of how you could sell somebody a financial roi no brainer where the only objection is that they don't believe you and it would be like cheap or free to prove it to them and so i was looking at all kinds of stuff like that like i think you can like audit people's utility bills i think the idea of doing like site speed optimization for e commerce is kind of interesting that was like the insight that i that i thought was like fun playbook to run that was like pretty straightforward if you're not that smart and you just wanna work hard what's really smart about your approach that i think very few people do is in business what most people do is they think about the product they're like oh i love that product or i know about that product or i love this industry i've i they think about their college major or stupid shit like that you work backwards from like what type of sale process do i wanna do every day because that's gonna be like ninety percent of my existence as an entrepreneur or it's just going trying to sell get more business mh and so you were like where somewhere that i can just brute force you know get dollars in the bank by going and you know calling or showing up on more sites and then even it just now you're like and the pitch i wanna be giving is a you definitely are gonna make more money it all i gotta do is prove it to you and i could prove it to you on a cost that's very little to me or a quick quick demo from my side to show you that the value is there and i think so few people take a sales first approach but as an entrepreneur that's actually all you experience in the business is just growing the business mostly like the product is very like fungi you could swap the product out yeah that i so what it is for me is i just i think like you guys i like business like i'm a business nerd i like hiring i like selling i like figuring out the systems and the processes so when you have that you kinda have the luxury of being able to pick a business that you think would be enjoyable and straightforward to run when you gonna start it i already started the the new thing so you only and that's only three weeks ago that you sold yeah do you have a new mindset with this new one like what's changed now that you had that experience you go into the new one do you have any new rules of how do you wanna do this bootstrapping bootstrapping i found and this is probably just because i'm more risk ave reverse than i care to admit but like this idea of the personal guarantee being tied to a franchise agreement i really felt like the one way door you know irreversible decision thing so i think going forward i'm gonna try to bootstrap as much as i can and keep my options open as much as i can what's funny is like maybe your tech coworkers were like that's this is very risky you know this is like insane what you're doing what i've noticed talking to a lot of entrepreneurs on here and through my life is that most entrepreneurs i don't consider myself to be a very risky person at all and most say that as well they're like i'm not that risky and like it's this idea of like there's difference between uncertainty which always exists and risk which you can produce uncertainty always exists and you just gotta get comfortable with that but you can definitely can like limit the risk and taking this person personal guarantees that's actually quite risky and so it's funny to hear that you're a risk adverse person it's like great fighters they don't pride themselves on how much like how much risk they're taking in the fight it's all it's really it's a self defense it's hit and don't get hit right like the best fighters if you look at like floyd may weather undisclosed undefeated it he didn't even really get it hit that right but he didn't really get hit that much it's like the black belts understand that it's about minimizing the damage you take while still winning yeah like there's always investors and they're like rule number one don't lose money rule number two pay attention to rule number one yeah and it's pretty funny let me ask you another question i'm i'm talking to my friend who's friend from college and he's got a a normal job business he wants to go do something entrepreneurial and i think he wants to do it very much for the money but i think truly the benefit would be he's just gonna have a lot more fun he doesn't like his job and just liking your day matters a lot more you had a good job but you did it for four or five years did you end up way ahead financially versus where you would've have been just taking your salary with raises and savings was it a big financial win or was it the life when the confidence the fund that you had like where was the win i think about it as like the escape velocity that i needed to go work i can work for myself for the rest of my life as long i don't like mess it up and that's how i think about it it gave me that escape velocity out of that and i think financial runway or it was confidence it's financial runway it's confidence its experience it's pattern recognition skills and everything like that and for me i kinda had to like do the because and really because i bought the business so far from my house i was gonna try to keep my job for like a second there and then i realized i to quit it that was the case for me i think for other people the move is find something you can like step into and test it out a little bit before you pull before you like fully rip it we've never done franchises and i've always been a little skeptical franchises it's like franchise seem like great business for the franchise wars not the franchise and so you did it you have a good outcome what's your current perspective on like is franchise is a good good place to go or like did you discover some other franchise along the way that you're like shit i wish i done that one that's now that i understand what makes these work that's a way better everyone tell me something smart about franchise i think there's three situations where doing a franchise makes sense i think the first one is if the franchise or actually has some secret sauce and like the nerdy way that i think about is if you listen to like the acquired podcast they do the seven powers if the fran org gives you a set one of the seven powers it could be worth it so that's brand with like the midas touch or it's like cornered resource like the chick f a recipe you can only get a chick f a that's worth it those are rare and and high demand the second one is if you are going into it to do like a roll up franchises are friendly for roll ups i think because you just have carbon copies of each other like the systems are like the integration is the hard part of a lot of roll ups the integration of a franchise is just like the people stuff it's pretty straightforward to roll up and it's like a walled garden like if you're in the system and you have the appetite and the capital to do a roll up you can do it in a lot of cases and a lot of franchises are ripe for consolidation because their incentivized to sell a lot of units because they make franchise fees on each unit and then what that means is in a couple years it's just like begging for consolidation and the third reason is basically my reason which like if you're literally not gonna do anything else you're not gonna do something unless you feel like you have the training wheels of a franchise that's what it took for me to do it like i don't regret doing it i probably won't do another franchise in my career but like it played a important role in my where you wanted to go i wasn't gonna do it otherwise well kevin you're you're the shit thank you doing this yeah thanks guys awesome thanks for coming on yeah thanks podcast is brought to you by my friends at mercury they make the world's best banking product i think you know already i used mercury for all of my businesses i think i have like maybe seven or eight businesses we use mercury as our business banking across all of them and now they actually just launched a personal banking account so i have my personal account there i moved off of wells fargo in chase i'm just all in on mercury why i like products that are easy to use i like products that get me and the problems that i so like very easy to make a joint account with my wife very easy to spin up virtual cards one click and i get savings yield it just has all the stuff that i need in one place so if you're looking for the best banking product on the market it's stephanie mercury i will fist fight any way to who dis disagrees me on that go to mercury dot com slash personal and learn more mercury is a fintech not an fdic insured bank banking services are provided through choice financial group and call them an a members fdic bring man what's up what's going on oh good to meet you pre meeting it with that brother what's your name know one know them yes no welcome to the show thanks for having me i'm excited okay i don't know if they tells you what you're getting into but maybe start with what we call the big juicy numbers so give us one number that'll will get us interested alright big juicy number we're doing four hundred thirty thousand dollars a month selling heated job massage john massage yes sir okay yeah so that was my david high school hey okay less detail the better on the so do you have one but is that what is a heated job massage listen i do have one it's in your pocket is this like a look thing see steve jobs had a thousand songs in your pocket he's got one hot job bone in your pocket kosher chair job massage or is this like a toothbrush it's it's super kosher actually okay yeah it's not going in your mouth but i mean i have two actually this one is like what we're selling right now k it's the gen one is like three d printed looks like a vape alright this one is gen i'm flying to china tonight actually so i'm trying to do it but you basically click this button or adjustable gen one doesn't work as far as that that one doesn't work i gave i gave all my san francisco gen ones away i was just at a conference it's over only of this so but you you have the two buttons there adjustable heat adjustable yeah there you go literally okay so i do this yeah so it's like a couple things you have most scraping is that what we're doing you know what some people are looks maxing okay but the main thing actually is it's for people with like tmj disorders right so i mean there like tens of millions of people out there dealing with chronic dropping and generally that audience is a is not the looks crowd my my main customer is not that but they do exist so so it is t t mj can you explain to like in america have one out of every how many people have it give us something like that yeah so around five percent of people seek treatment but it's many more that have and potentially don't even know so like there are a lot of like really common things that happen like the way i started dealing with it was like five years ago my jaw started clicking on the right side i was like okay i think my mom got this you get it like temporarily sometimes right and things like that can bring it up is it just annoying or is it dangerous so the the clicking if it's pain free oftentimes it's it's just annoying some people say up to like one and three people have this at some point in their life but for me it started getting worse it started to click on the left and then my jaw started like locking closed and then yeah that would happen like once a month and it once a week and once a day i would wake up and i couldn't like brush my teeth i couldn't causes this it's a good question like a lot of different things can cause it you know like cl for example a lot of people have a cl issue cl grinding at night some things is like you know a lot of looks maxing can actually end up causing this it could be trauma to the joint it could be all this for for lock up specifically there's like a disk in there and it you know it can displace and you put this on your jaw how often and how long so the idea is a couple things for for the musculature right like most people's pain actually ends up coming from like the muscles and because it's over that kind of stuff so you're using it as like a scrape or a heater once a day or like a couple times a day twenty minutes a day that that's what the research says you do the doctors say but honestly it's just like a k i am i have a flare up my my head hurts you go in you you work on the muscles or you just have like instant heat in your pocket close to half a million a month yeah so you sell like five million a year of this that's annual annual yeah and it's it's called your tmj pen called your tmj cost so we're we're normally two forty nine right now there's like a clear sale and did you funding no no no it's no very much fully bootstrap yeah this is i feel like i would see this on tiktok shop i would see this like on the ig ads late at night yeah listen it i i i wish you're the guy behind those i am that guy i am that guy on in instagram i the tmj i've seen you you're you're the face of this right i am the face of that i i've seen you a lot of rage bait on instagram a little love of it so what what's you said rage bait okay so one of our like big most viral videos is like i'm on this plane right and i this this karen just went this absolute care next to me starts like calling me out she's like it's like hey you can't be vaping on a plane you know and i like it really like know it's it's it's not a vape wait let me explain i'm like i'm like flustered trying to like explain this that it's like my invention like i i made this it's for people to drop and it's not vape and that concept got like a hundred million views really wow yeah but awesome how did you think of that just to go with karen on the plane where was it's mostly the vape does your mind on the plane really okay very it looks like a vape everyone tells me that so right what's gonna stop every chinese knock off from coming after you i mean listen at some point like they're gonna come but the reality is like when i when i started this like i i i looked i looked it up i i was heating and mass miso myself like every day with like a mug of water out microwave grave whatever i was i would look it up and there wasn't a heated massage for the job that there were no products period sold for people with tmj problems like not a single one which was baffling and so i like not there was no brand there was no you do the actual i developed this and yeah like i i'm the first brand did you say you pretty printed this yeah so the way i started the businesses because like dude listen hardware used to be i think one of the most risky things you can get into making like a hardware device you'll look at shark tank like people are like yeah i spend like a hundred grand making this and it's like dude that was a big mistake how much did do you spend to make the first handful i spent less than three thousand dollars and the idea was like there are like three things that like aligned in this asia we're living in that makes it probably now one of the least risky things that you can do making like a hardware consumer product first having all the access to like information like engineering at this point is like loki kinda easy like okay don't clip that but with cha bt with youtube like i didn't know how to make electronics i didn't know how to make a pcb what were you doing looked it up i was i was a mechanical engineer i was in college like how old are you now twenty four how old is this three years since i started making it and then two years of selling it and so you're like i'm i'm an idiot so you have a three d printer at home yeah and you're on chat eb at the time and you're like teach me how to like you're like give me a let's chat be back in the day was not good but then like like there's a motor mean i know how electronic what did you you're at home you never made what i did i so i wrote out what do i need this thing to do i need to heat i need vibration i need you know it to charge and needs to be portable to whatever you write out what you want the obvious thing that it needs is like a pcb it's a printed circuit board so it it's those little green yeah things like yeah it looks like a chip has a bunch of things a bunch of lines on it so to design that like i i didn't know to do but what i looked on reddit i asked for advice i went on youtube i figured out how to design this thing that was like the first thing i did then you designed the casings you look up potential motors you buy them all test them and and you ended making the assembling the thing yourself he ones yeah so for i was assembling these things myself up until literally a year ago to the day we we got up to like eighty k a month i was assembling shipping i had two three d printers running my closet in like in my apartment and then i i kinda went like alex for mo mode was like wait what if i just you you know do this but more you know so i found like a three p l and then normally a three p say i mean you know this but they just ship stuff for you they like fulfill your stuff but i was like hey let me use your employees like i'll put my three printers in your place you guys can use them and come on the spot there yeah you can make them and so now my three p makes it and that's how we were able to grow to this point you're flying to china tonight i'm flying to tonight you're gonna get you already have because this is made yeah so we i a prototype you found something in alibaba what'd you do no no i i did not do that that would be risky no i i got connected so i i'm like pretty big on instagram now in like youtube so i i i made sure to like get connected via word so i found a factory together with them we we designed this thing my flew there like a couple months ago we we got to this sort of like golden sample and now productions like sort of done like the molds are done ish so i'm going there now to like get the final samples and then we'll be able to how many employees do you have i don't have any like like full time employees but i have like you know contractors i have like five contractors so if you taken money out of the business yet are you like oh if you're knowing bucks out of the business last year like this year it'll let's say let's say hypothetically you do five million in in total revenue in twenty six how much cash flow per like how much profit i don't know if you measure it yeah it's around like twenty percent like net income i don't know i i i kinda look it is just like my business like some of it's in the business bank some of it's in my vanguard some of it's in my personal bank i don't i kinda like taking us i see fit and do there's no repeat purchase right like nobody's gonna buy yeah there's no yeah but what is like i remember years ago when there you know the gun yeah like my i have a hyper vault that i used forever i love it and i remember they came out and people were like dude like all the chinese companies are just gonna knock this off but they they did did yeah did but they did do a good job of like kinda of branding it where i i am like into my hyper vault but then they also came out with like thirty products like the things that like do my legs yeah and i love all of them and it's become on my routine is there like other things that you're gonna you can do i do have this vision of being like a a brand specifically focused on making products for the tmj community the brand is like your tmj yeah so it's like your tmj pen then i'm thinking like your tmj band your we had this guy in the podcast named david yeah and his whole company and like we start out as a shit but it wasn't entirely a s where it was like sam doesn't believe that picking an important name is actually important and this guy's whole job he makes a lot of money naming companies he blackberry and sw and sonos fabric breeze he named all this stuff and i am totally on board with what he's doing now and his whole i actually just hang out the end day his whole thing is like if you're young entrepreneur start your company who cares but once you get some traction consider making a name that can last forever because it actually does matter and i buy into that i would highly consider keeping that as maybe the tmj pen that product yeah but having like a proper company name yeah that's that's possible i don't know i feel like it's just like not the main like concern right now because like the maybe for them for for this product yeah like people it's like this is like the tmj pen you it's like it's like when people say tmj to like there's no other thing so it's like i think that's a pretty good name but yeah for the company like do you said like you did have a question what what was your question gonna be well yeah my question was gonna be like listen you you're gonna you're gonna be like money doesn't matter doesn't know but we would say it we won't say that it's called my first million not just one million and stop oh i heard a lot of guests come on the show it's like you know they've made and it's like oh i just like i want a couple million in the bank right i want that so i get this urge to like sell in maybe two to three years or something sell the company yeah and i don't know what therefore i should like really be focusing on because like if it for me like the obvious thing right now is like hey what's the like main constraint it's you know going and solving the supply right it's a supply issue be like command it's short constraint i mean have your long term constraint in the yeah and and i don't know what the like long term like maybe it is a long term constraint not have other products but the is like i don't know like what would be super important then to weigh against like losing focus on just like cranking up more ads now so maybe it's recurring revenue right like maybe as you get into tmj like supplements and and oils and creams and stuff or maybe it's having more products on the consumer side maybe it's having ip maybe it's having registration with the fda maybe it's having you three options yeah and you don't have to decide right now but it's good to know what they are because then when you're doing the business you'll look for clues that support one of the three options either you can go wider tmj so you could say great tmj this helps but it's not a solved problem i can sell the creams i can sell the oils i can sell the supplements i can sell to whatever so your wider tmj you can go wider pain relief so maybe heated massage for other conditions other parts to your body the kinda hyper rice model the paragon a gun model where you're gonna create you know right just like a recovery company yeah they're a recovery company there and you would be a pain relief company and you would say okay cool i'm gonna go find all the different types of pain i'm gonna create like specialty products i'm gonna run the same playbook across them and so like right now the those slot heated heated vibrating slides is like the big one that's going viral right now that i think someone nike doing or somebody's who's doing yeah so you could you could go wider in that direction of pain relief he did maybe heated mass pain relief or you could just say actually i just got good at doing this model of like content based selling of products i now know how to do a little bit of supply chain a little bit of this a little bit of that but i'm really good on the marketing side and and i'm fundamentally limited by category and product and if i just take you know i'm a i'm a nine out of ten entrepreneur i just need to find a nine out of ten opportunity tmj is just a two out of ten opportunity because of the nature of what i'm doing and you just take your highly transferable skills of creating content selling through content you know and you just apply it to a better category and you that has tailwind you don't fight the the small tam problem the deal there potentially have liquidity already and you're so young you're gonna have money in the bank and you're gonna have like a bunch of lessons learned that with a clean slate like this can be your starter business like most entrepreneurs have have a starter business have a thing that they did early that wasn't their lifetime business and you know so that's the other possibility so you you you don't know which one of the three it is right now maybe you should write down a hypothesis as to which one of those three it is and then as you operate the next six to nine months and you're focused on growing this business you'll least be aware of and looking for clues as to which one this might be maybe you launch a little test in one of those one of those three areas you figured it out that way yeah i mean i think i think it's what it is like i i like to use the business as like a learning opportunity like as it's just like a personal growth thing it's probably gonna be like hey is there more juice to squeeze out of that and in the tmj space where definitely is i it because i think so too when i a few a handful years ago i had lyme disease yeah and i like with look cotton like reddit and stuff and i noticed that the the very clear trend and amongst some other friends who got sick with different illnesses or injuries there's dozens or hundreds of injuries or illnesses where people feel like no one's listening to me no one takes me seriously what the hell but i know something's wrong i don't feel good and so they go to these communities and they buy these products where it's like finally i'm being heard and i'm being catered to and it's i if i had a guess this is one of them because i heard that word tmj but when you see it like clicking i'm like oh that can't be that bad and then the person has it like it's horrible you know what i if you go to the doctor that just like well you know just stress so much like i'm pretty stressed because this hurts every day also in addition to whatever calls in the first place my first my first specialist i went to kinda me like two thousand milligrams of tylenol all day i was like i would if i to make a guess this will you're gonna grow a lot over the next three years and sell it and i think that'll be pretty cool these are fundamentally pretty tough businesses to sell you know non recurring niche product heavily based on your marketing genius so it might be that like optimizing for the exit sometimes looks different than optimizing for cash flow and so you wanna kinda weigh those you don't even again you can go look at some comps and be like is there any who's done this before and exited well let me go talk to them and understand like does the factors that made that a successful exit match what i what i have fundamentally in my business but if it's just a cash flow business that's great cash flow business can be awesome have you ever talked to any bankers or brokers i haven't a lot of times people only do that when they're ready to sell when you should have done it three years earlier and you find up you're like i have a number in my mind just tell me what i need to achieve to make that number possible and i'm just gonna go do that for two years tell me three companies you looked at that are like this what did they sell for yeah why did they get that mic where they got when did they do it and you're like okay could be like this revenue this cash flow and you know these are the the five or six other metrics i'll just do that for three years and the and then i'll look up and be like okay okay yeah i if you guys know any until like i i had some people like reach out on linkedin about it that they seem kinda ski so i was like i'm good yeah no i would so i would talk to quiet light they're more of a online brokerage but they're easy to talk to go they i if you go look at their things it'll they have a lot of these like fba businesses that they sell that like are kind of like i would say lower durability lower quality businesses overall but they seem to be selling so like they know how to package those what type what business working brokerage okay yeah dot com so go to them and then go look at brokers in your space maybe like you know you just have to google and like tell chat you to go do deep research on who's you know who are bankers that sell products like mine like i don't even know what the name of this category is but it might be like it's like non medical illness non medical wellness device is okay cool and you could you email the founders of people who have had had access and say who did who all did you talk to because everyone who sells the company will talk you three or four they'll say i this person they are great these two are kinda good but i would not delay this what sam said is absolutely right you don't talk to them when you're it's time to sell you first talked to a year or two before to actually understand what you need to do in the next twenty four months to be a sell business in the end and it the good thing about a sell business is if somebody else is gonna wanna own it it's probably the same like reasons you would wanna own it yeah so there's no harm in building a very sell business because at the very least you made a business that's higher desi ability to own for yourself yeah or for somebody else yeah dude thanks for doing this you're awesome of course thanks for having you're luck in china yeah good here alright that is part two of future shot we got one more episode coming out of the san francisco location we got three more founders coming up on the next episode make sure you're subscribed on youtube on spotify we looked at the data i think eighty ninety percent of you guys are not subscribed who watched the episodes what are you doing subscribe so you can watch episode two and do me a favor whether you're a listener then you're gonna go to spotify or if you're a watcher go to youtube put in the comments the city that you want us to go through next right now we're doing this in francisco we've already done new york we'll go somewhere next to it so let's me know in comments right now i feel like i could rule where i know i could be what i want to put at all in it like a days off on a road less try never looking bag alright let's take a quick break i wanna tell you about marketing school it is a podcast that is part of the hubspot podcast network and it is run by neil patel and eric sue and these guys are both marketers who are running businesses and so if you want real world tactics from practitioners who are actually out there in the field doing it this is the podcast for you check it out wherever you get your podcast